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AWB opposes Seattle square-footage tax |
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Written On: November 06, 2007 |
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OLYMPIA – The Association of Washington Business opposes the Seattle square-footage tax proposed by Mayor Greg Nickels and asks the mayor and city council to ditch the plan. The new tax would undo legislation adopted four years ago to create a fair system for apportioning business taxes among local jurisdictions.
"Washington is already a high-cost state for employers. Because of our tax structure, business already pays disproportionately higher taxes than competitors in other states," AWB President Don Brunell said.
For example, according to the Washington Alliance for a Competitive Economy's annual comparisons of business costs nationwide, Washington employers’ taxes—including workers' comp and unemployment taxes—account for over half of the taxes paid to state and local government. Oregon, which has no gross-receipts tax like Washington’s B&O tax and no sales tax, has a much lower tax burden on business.
"That is the principle reason why cities like Seattle have to be very careful about levying new taxes," Brunell said.
The proposed square-footage tax uses a complicated formula to impose Seattle taxes on business revenues generated outside the city. It would affect businesses, particularly accounting firms and attorneys, that provide goods and services outside Seattle, costing them an estimated $18.6 million annually.
In 2003, the Legislature passed HB 2030, the Municipal Tax Fairness Bill, to reform city B&O tax practices that resulted in confusion, complexity and unfair taxation of business income. As the square-footage tax is currently structured, it only applies to businesses that receive fair apportionment under HB 2030. If Seattle unfairly taxes a business for years and the Legislature finally provides fair apportionment relief, it must now pay the square-footage tax.
"It's a revenue grab," Brunell says. "We support fair business taxes. That's why we backed HB 2030. And that's why we oppose this new, unfair replacement tax."
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