Washington Policy Center Proposes “Single Business Tax” to replace the B&O Tax

The Everett Herald recently published an op-ed by Jason Mercier and Erin Shannon of the Washington Policy Center (WPC) in which they proposed that Washington's B&O tax be replaced by a "Single Business Tax." This single business tax would be based on total receipts but would eliminate the complexity of the current B&O Tax's multiple rates and tax breaks.

The proposal would be revenue neutral but use "one fair, flat rate" that applies to all businesses equally. They described the proposed tax thus:

"Here is how the Single Business Tax would work. Each year business owners would choose one of three ways to calculate their taxable receipts, selecting the one that results in the lowest tax burden. Calculating the taxable margins would be based on the business':

•Total gross receipts minus labor costs, or;

Total gross receipts minus all production costs except labor, or;

60 percent of total gross receipts.

The business owner would then multiply the taxable receipts by the Single Business Tax rate. Cities could levy their own business tax, but the same uniformity standard would apply -- any local business tax would have to be based on a single rate applied equally to all business owners, with no political favoritism. The final amount owed for each taxing jurisdiction would be sent to the state in one payment. State officials would then distribute the funds to different local governments."

They state that this proposal would eliminate the multiple rates on business and repeal the special interest credits and exemptions that currently riddle the B&O tax.

More information on this proposal can be found at the WPC website here.