Is Gov. Gregoire being coy?
Asked to list the top impediments to business in the state, Gregoire said she would like to overhaul the business and occupation tax, the state’s main tax on businesses. Calling the tax “ill-conceived” and harmful to small businesses, she invited business leaders to develop a plan for changing the system.
“If you want to come forward with an alternative to the B&O tax system in the state of Washington, the welcome mat is out from me,” Gregoire said.
I suppose there might be a number of B&O alternatives, including a Value Added Tax, or perhaps no business tax at all, but in inviting business leaders to develop their own plan, it certainly sounds like Gov. Gregoire is inviting them to propose a corporate income tax… a surprising invitation from a governor who has repeatedly dismissed even the notion of starting a conversation on such reforms. Encouraging, sure, though considering the longstanding split in our business community over this issue, if she really wants to overhaul the B&O tax, our negotiator-in-chief is going to have to do a helluva lot more than just put out the welcome mat.
The B&O tax is not only “ill-conceived,” it is an historical anomaly. In 1932 Washington voters overwhelmingly approved a personal and corporate income tax, overhauling a tax system that had previously over-relied on property taxes, but when the Supreme Court controversially ruled the new income tax unconstitutional while leaving the new property tax limits in place, the state was thrown into a budgetary crisis. The B&O tax was created as part of a hasty, and presumably temporary, political compromise.
75 years later, Washington’s B&O tax—a tax on gross receipts, rather than profits—remains just as ill-conceived as the day it was implemented, especially during this economic downturn when many businesses are forced to pay taxes on their losses. But while business leaders love to bitch about the B&O’s complexity and burden, they’ve thus far been unwilling to work together to propose a reasonable replacement.
Washington remains one of only five states without an income tax, and while Gov. Gregoire is right that there is currently little public support for a personal income tax, I doubt there would be much public opposition to the corporate variety, if that’s what the business community chooses for itself. And while such a revenue neutral reform would do little to address our long term structural revenue deficit, it would at least be a first step toward that conversation that Gov. Gregoire insists voters have no interest in starting.
Cynical is right. She has to. But to allow herself leeway, Cynical will be right again; she’ll have the legislature propose it so she can claim a Pontius Pilate and was her hands of it…
I hated the B&O tax. Just watched money float away…
Watch and see if Cynical isn’t right again.
Hmmm… Goldy, Why did Gary Locke give Boeing all dem tax breaks back yonder? As Puddy remembers back in 2003, Locke and his wizards team of financial geniuses cobbled $3.2 billion in tax breaks for Boeing.
I don’t think there’s any way, politically, that Gregoire or any other governor could take the lead on an income tax. The vested interests in the current system (big business who get special breaks on the B&O tax) would react forcefully, and the local Republicans would like nothing better than to be able to brand her for trying to introduce an income tax.
So the impetus has to come from the ground up, a difficult proposition given the complex nature of the business tax laws. Most voters don’t know what the B&O tax is, so they are capable of being manipulated by those who want to scare Washington voters with the prospect of an “additional” income tax.
So perhaps the governor is on the right track, putting the onus on the businesses to propose an income tax which the governor could then merely “accept”. But in order to substitute our current sales+B&O tax system with an income tax, we would need a much broader grass-root effort, going under the banner of “Tax Reform”.
As for a “corporate” income tax, I think that’s a mistake. Why apply a tax to one form of business structure, and not others? The majority of Washington businesses are small enough they could avoid a corporate income tax by simply converting to sole proprietership, a partnership, or a limited partnership. At least the B&O tax ignores such choices of type of organization. It needs to be a “business income tax”, not a “corporate income tax”.
And most importantly, it needs to be coupled with an individual income tax, and then we could do away with the sale tax entirely. That would relieve a lot of burden on businesses who are currently having to comply with the new “destination-based” sales tax system, which is another jury-rigged attempt to make a flawed tax system (the sales tax) collectable for interstate and internet-based transactions.
In theory I would support a state income tax IF the state sales tax was eliminated and property taxes were reduced. The problem is, what we would end up with is a marginal and immaterial decrease in the sales tax, AND a state income tax. So in effect, we would likely have the taxes we have now, PLUS a state income tax. No thanks!
The B&O tax has got to be one of the more punative taxes. Its assessed on the gross receipts of the business, i.e. no deductions. So you pay this tax whether your business is profitable or not.
@5 It’s levied on all income generated, including from interest and dividends that may be generated from investment accounts where cash is parked – an aspect I especially detest. You’re absolutely correct.
A small correction: “Seven states choose to impose no income tax. These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.” (from Wikipedia)
The problem with taxes is that the GOP doesn’t want to pay their fair share. If they’d just stop cheating on their taxes the way they cheat at elections and everything else – we’d have no budget problems.
Puddy-
Gregoire will do anything to not address the real problem…government excessives and massive spending increases BY HER!
Gregoire is going to threaten to punish folks one constituency group at a time…saying Washington is sooooo broke with the only way out INCOME TAX.
She is sooooooo predictable.
Her cuts to date have been pathetic.
Drop in the bucket per Gary Locke and Locke’s formerr Budget Director.
They call Gregoire’s cuts INSIGNIFICANT and they are right on.
Gregoire===TAX and SQUANDER and TAX some more.
Goober @ 8–
Broken record asshole.
How much property tax do you pay??
Pay more dimwit.
No, total elimination of the sales tax, offset by a state income tax, is no solution — it puts us in the same box as Oregon, where state budget problems are same or worse than ours. A modest income tax should be used to reduce the sales tax to 5 – 6%, relative painless compared to the 10% we’re reaching today.
It’s hard to imagine voters accepting a corporate (or “business”) income tax without projecting it into the future when it would be applied to individuals (“it’s just a foot in the door…”). The campaign will lead to the rejuvination of the GOP right-wingers; they will have a field day.
The only hope is that we’re going through some type of true political realignment, that WA voters have finally truly tired of GOP wedge issue/soundbite/attack-dog politics, that they can think things through for themselves and make rational decisions.
While the voters were wise in rejecting Rossi’s simplistic traditional GOP posture, and for choosing Obama over McCain, I’m not sure it’s quite the realignment that would be necessary for voters statewide to rationalize our tax structure.
I have to agree with #4. (Yikes!)
I would support a progressive state income tax IF, and only IF the state sales tax was eliminated.
What I don’t want is all three, with the taxes we have now, PLUS a state income tax. No thanks!
Forget the income tax, that’s not going to hurt the HA hooligans as much as the new porn tax that Democrat Rep. Mark Miloscia wants.
Democratic Rep. Mark Miloscia said an 18 ½ percent sales tax should be levied against Playboy and other adult magazines, as well as pornographic photographs, movies, videos, cable-television services, telephone services, audiotapes, computer programs and paraphernalia.
paraphernalia, does that mean the state is going to tax the right hand of byebyegoober?
Lucky for steve the goat sex expert he gets his porn from farming magazines and animal husbandry videos. He just has to pay the regular sales tax.
I thought taxes were good. Like biden said, paying taxes is patriotic. Aren’t you patriotic, don’t you love your country?
Of course once lefties realize they are the ones paying taxes they either don’t pay them, as evidenced by the picks of obama, or complain, as evidenced by blue john.
Typical.
byebyegoober doesn’t pay taxes. He lives off his parents.
State Income tax is an immediate salary reduction. I like to view where I would retire.
States with the highest sales tax (when you include weighted averages for county and city rates) are: Tennessee – 9.4%, Louisiana – 8.7%, Washington – 8.5%, New York – 8.25%, Arkansas – 8.2%, Alabama – 8.15%, Oklahoma – 8.1%, and California – 8.0%.
I’m going to skip over the troll comments in this thread and get right to the core of the issue.
Washington has an average level of taxation and spending compared to the other states. That’s not surprising, because citizens here generally want and need the same services — schools, highways, law enforcement, etc. — that people in other states have.
What’s wrong with Washington’s tax system is how the tax burden is distributed. Under our patchwork Rube Goldberg tax system — which was not designed by rational minds but consists merely of legislative expedients piled atop each other — those most able to pay get to skate while a disproportionate share of the costs of government fall on small businesses and the low-income strata of society.
The obvious no-brainer solution is to fix the maldistribution problem by getting rid of the most regressive tax (including the B & O tax) and shifting some of the tax burden to where it belongs — on large corporations and affluent households.
I’m not talking revolution or Lenin-style confiscation here. All I’m saying is we should tax businesses and individuals exactly the same way 45 other states already do. It’s fair, and it works, and that’s why everyone else does it that way.
The only difficulty with this is making it happen. To do it, we simply have to sweep aside the complaints and obstructionism from our state’s selfish moneyed class.
There’s never going to be a better time to do it than right now.
A VAT is not the way to go because it’s merely another increase in our regressive sales tax. All it would do is shift taxes from overtaxed small businesses to even more overtaxed lower income households. It would ake a bad tax system worse.
It also would hurt retail trade by creating additional incentives to evade Washington taxes by making retail purchases on the internet, or in Idaho and Oregon, which could produce a net reduction in state revenue.
It also would distract attention away from real tax reform, which necessarily must consist of shifting part of the tax burden from those who are overtaxed — small businesses and lower income households — to those who are undertaxed: Big business and affluent households.
Simply substituting one tax for another, without changing where the tax burden falls, accomplishes nothing.
Pelletizer wrote:
Pelletizer, go complain to the state Democratic. You’ve guys been in power too long.
An obvious, no-brainer, modest tax reform is a provision to take away the goodies handed out to private businesses if they don’t maintain the jobs the goodies were supposed to buy.
Take, for example, the Cabela’s outdoor goods store in Lacey. Cabela’s is the company that has mastered the art of extorting tax concessions and outright giveaways from local communities in exchange for a slew of minimum-wage retail jobs. While I don’t know all of the details about the Lacey store, Cabela’s typically tries to get $50 million to $60 million in incentives from a local community for a store that costs $20 million to $30 million to build — pocketing the difference.
As an investor, I like this business model so much I bought hundreds of shares of Cabela’s stock. As a taxpayer, I think it’s the moral equivalent of carjacking. (But hey, as long as it’s legal and town fathers are stupid enough to fall for it, I figure I may as well get some of the profits!)
My understanding is Cabela’s in Lacey even has a deal to collect sales taxes from customers and keep the local sales taxes for 45 years. That’s right, when you shop there and pay nearly 10 percent tax at the register, you think you’re supporting local services like police and fire, but the local portion of the sales tax actually goes from Cabela’s cash register into the pot of corporate profits! And, from there, to Roger Rabbit (which is okay by me, in a sense).
My modest proposal is this. If Cabela’s lays off store help the state, county, and city of Lacey should yank a proportionate amount of the economic incentives, including tax concessions, given to Cabela’s to build a store there. If they lay off 30% of their help, then they should fork over 30% of the local sales tax they’re being allowed to pocket. If local taxpayers don’t get the jobs they were promised, why should Cabela’s get to keep the taxes that bought those jobs?
What could be simpler or fairer?
Revisionist historian @19: Don’t blame this on the Democrats. We can’t get tax reform in this state because of Republican obstructionism. For years, we couldn’t get basic highway repairs in this state either, for the same reason — Republican obstructionism. The voters had to get fed up enough to give Democrats control of both houses of the Legislature before we could get potholes in state highways fixed. Obstructionist Republicans would rather break an axle than pay another nickel of gas taxes! Our unfair, regressive, 19th century tax system burdens only one group — self-centered moneyed Republicans who don’t give a damn about anything except putting more money in their own pockets. Our tax mess, like all our other messes, is a 100% made-in-GOP manure pile.
@16 I don’t pay 8.5% sales tax, and haven’t for a long time. Where are you getting your numbers?
Isn’t that what you accuse republicans of doing? Welcome to the republican party. Where actions are more important than the words one preaches.
Although it is good to see that you are as capable of being as selfish and greedy as any right-winger.
@13 You seem a little hung up on livestock there, Marvin. Hmm, I suspect that you might have an issue or two you’re not dealing with very well. But please don’t take that as an invitation to share. I doubt that there’s anybody here who gives a shit about your problems. I know that I certainly don’t.
Marvin @ 13: Yea, I read about that the “porn tax”, and I thought it was ridiculous. Although it certainly classifies as a “sin tax”, and I’m not opposed to “sin taxes” as a general principle, I doubt it would raise much money.
The porn business, like the recording and newspaper industries, is being killed off by the internet. I would be surprised if any of those three business still exist five years from now in their current form.
They could try to tax the topless clubs, but if the Feds have their way with the local kingpins in the Seattle area, they might well be out of business soon. Also, those types of buisinesses are notoriously hard to fairly tax, as much of the revenue is “under the table ” (no pun intended) or syphoned off in money-laundering schemes.
It’s interesting to note that when I said steve the goat sex expert and listed where he got his porn from you spoke right up.
Very telling.
I didn’t know you were one of us right-wing trolls.
@26 “Very telling.”
What, that you can’t let go of the farm animal thing? Yeah, that is very telling. But I had you figured out a long time ago. You bring nothing new. You’re still boring, simplistic, shallow and insipid. You’re no more than a surface personality, forever splashing around in the shallow end of the pool. Your only significance is that we here occasionally respond to your mindless blather. And that’s only because we like to watch you jump at our command.
Jump, Marvin, jump!
Are you still replying to me?
I see I loosened the puppet strings a little too much. It only took you 16 minutes to feel the need to reply this time.
Try and develop some self-control. When you feel the need to hit comment, go outside and take a walk. Get some fresh air. Find a hobby. Screw your wife.
I’m sure someone like you has better things to do than reply to me.
Of course, if you don’t… hit submit comment again.
Speaking of self-control, I see that Marvin’s jumping for us again.
Come on, Marvin, spew some more of that hate you have for Christians.
You exercised excellent self-control… it only took you 6 minutes to reply to me.
You obviously don’t like the words of liberals thrown in your face. That must suck to share with your friends your hate for republicans then be so offended with their hate for your faith. That does explain a lot about your posts.
Why not call bill mahr and ask him why he has such hate/contempt for people like you. Or just watch his movie, it’s out on DVD.
Don’t blame me for what your fellow obama voters say. That’s very punkish behavior on your part.
Let me give you some more words of wisdom from your fellow obama voter, bill maher.
For one, he believes people like you have a neurological disorder. I guess that would explain why you do so much of that projecting.
He also believes, or at least said, religion is a cause of many of society’s problems and that the practices of religion are mired in hypocrisy. Damn, look how many times you’ve been exposed as a hypocrite on this blog alone. Bill doesn’t even know you and he believes you’re a hypocrite.
You should get his movie. If you think his words I quoted were hate, you should hear it directly from his mouth.
@9 So, giving state workers their first cost-of-living increase in 5 years is “wasteful” spending? How many people on Wall Street went 5 years without a COLA?
@23 “Isn’t that what you accuse republicans of doing? Welcome to the republican party. Where actions are more important than the words one preaches. Although it is good to see that you are as capable of being as selfish and greedy as any right-winger.”
That’s right, genius, I invest like a Republican — because I’m in it for the money!!! Sheesh, did you think this was a fucking hobby or something?? And yes, in addition to being a Democratic Party hack and liberal propagandist, I’m also a fucking hypocrite. So what? You guys are hypocrites, so why can’t I be one, too? Why should you guys get a monopoly on hypocrisy? Republicans want monopolies on every fucking thing! It’s not news to anyone else on this blog that I used to be a Republican and still behave like one — have you been asleep under a rock?
I think we need our state tax structure to include both sales and income taxes simply because leaning too hard on one means of taxation simply results in people determined to avoid that tax by any means necessary. Beyond that, our present tax structure for individuals is too regressive.
The B&O tax ought to go, though – it’s just pain punitive, and there are too many loopholes.
Much of what I’ve read about Washington’s tax structure gives me the impression that it’s a lot like our Federal income tax structure before the last major revisions in the 1980s. In theory, we have a high corporate/business tax – in reality, there are so many exceptions, it’s almost a joke. The public has to cover the cost, they get torqued and want either more business taxes, less personal taxation, or both.
I think a business income tax, not extreme but firm, with minimal to no exceptions, has to replace the B&O tax.
As for a personal income tax, a simple place from which to start would be to take three percentage points from the state’s portion of the sales tax and have a three-tiered structure – 1%, 2%, 3%. It’s not as big as Oregon’s, which when I last lived there was maxed around 6.5%-7%, if memory serves, but it’s a starting place such that a majority of the state will feel less of a bite, and those like myself who (knock on wood) continue to make a good living pay more of our fair share, but nothing onerous.
Yes, there are better ideas in this regard all over the place. But the public has to be willing to accept the idea of an income tax and I can’t say I’ve seen one that’s as simple to comprehend and doesn’t give the impression that wool is being pulled over eyes.
A federal income flat tax of 10% would be great. No deductions. Rich and poor pay the same percentage.
That way everyone will feel that they are contributing to the country.
Of course there are a few disadvantages…
The poor, although paying a smaller dollar amount, wouldn’t be as eager to raise taxes. Also with everyone paying the same percentage, it would be harder for politicians pit one class against another.
And then the democrat party goes quietly away in the night.
No income tax for Washington! Never, never, ever!
I’ll keep what we have now rather than face yet another government intrusion into my life. If you feel strongly in favor or an income tax for this state, fine: send the DOR a check for whatever you think is right. Just leave me and my money out of your “feelings!”
Maybe while the legislature is languishing around waiting for the revenue forecast they can actually do something useful for the state and start working on some sort of revision to the B&O tax.
If businesses would rather have a income tax, then they should have it. While I have been less than pleased with how the information rolled out about the financial problem, I’m guessing the Governor is damned sick of businesses whining and bellyaching about how crappy they have it. Here they are feeding at the trough of the good will of the people. Why, we let them squat on land and run their little businesses!
(I’m just imitating the best of the pro-business in their constant crabbing about state employees)