By STATE REP. DREW MACEWEN

There is much work being done in Olympia as session moves forward. Budget negotiations are well underway and bills are being voted on in the House and Senate. This is a busy time for lawmakers, and

I’d like to take this opportunity to update you on an important bill I have introduced to help improve our state’s economy.

I introduced House Bill 2150, a bipartisan bill, to modernize Washington’s business and occupation (B&O) tax. The B&O tax was first adopted in the 1930s, and in the years since has been amended and complicated by both parties. The system is outdated and a major obstacle to job growth in our state.

The current system has 50 classifications and 10 different rates, plus multiple exemptions and deductions, which many call loopholes. According to Forbes Magazine, Washington state has one of the highest startup business failure rates in the nation. I believe this is due in large part to our outdated and complex B&O tax.

Sectors of our state economy have struggled to survive, expand and add family-wage jobs. I believe the B&O system is partially to blame for this.

As a state we have picked winners and losers for decades. I believe it’s time to put Washington businesses on an equal footing and comprehensively reform our tax system, so businesses can survive, compete and grow.

I believe the reform I introduced accomplishes those goals. My plan would give businesses the opportunity to deduct $500,000 of their gross receipts if that is greater than the other deductions the plan provides. This change alone would eliminate the B&O tax for over 285,000 businesses in the state. Businesses could also choose one of the following three deductions:

• Cost of goods sold;

• 30 percent of revenue; or

• Up to $200,000 per-employee compensation.

My plan maintains the aerospace and agriculture system currently in place. Further, we exclude non-profit organizations altogether.

You may be asking what this would do to our state budget. The impact of this reform is revenue neutral, meaning no money is taken out of the state coffers. We achieve this by consolidating the number of rates from ten to four, and having a service rate of 3.75 percent, retail/wholesale/manufacturing at 1.6 percent and telecommunications at 1.2 percent, while keeping aerospace at the current rate.

With this reform we make our state’s B&O tax fairer, flatter, and more flexible. We remove the tax burden on 285,000 businesses in our state with no impact on our state budget. We create a 21st century tax code that allows Washington state to lead nationally, and compete globally. And finally, we remove barriers to growth so that we can accelerate job growth and get Washington working again.

Finally, I encourage you to contact me to share your thoughts on this important reform, and any other issues you care about.

Together, we can make it morning again in America.