February 4, 2019
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Tax relief for small manufacturers gains traction in Legislature

House Bill 1348
cleared the House Rural Development, Agriculture and Natural Resources Committee on a 15-0 vote Friday morning.

The bill would reduce the manufacturing B&O tax rate from 0.484 percent to 0.2904 percent for most manufacturers, which is the same rate paid by Washington’s aerospace industry.

“Ultimately, we’re trying to move to all manufacturers paying the same rate,” said Rep. Mike Chapman, D-Port Angeles, one of the bill’s co-sponsors.

The bill’s sponsors, AWB and family-owned companies helped get the bill off to a strong start on Wednesday.

Manufacturing creates good family-wage jobs, especially in rural areas, supporters told the committee.

There was a similar proposal last year, but Chapman said the new bill includes an income threshold instead of a geographic component. The measure would apply statewide to businesses that have up to $50 million in manufacturing activity, which could even apply to smaller companies in King, Pierce and Snohomish counties, Chapman noted. After Jan. 1, 2030, the $50 million threshold would be removed.

The bill also extends a lower tax rate for the timber industry, which is a significant employer in Washington.

“This is the time for the Legislature to make a commitment to an industry that has been with us through thick and thin, that has weathered the recession,” Chapman said.

The bill is co-sponsored by Rep. Jacquelin Maycumber, R-Republic.

Maycumber stressed that Washington manufacturing is among the cleanest in the world.

“This is not only important for our rural economy, but also important for the environment,” Maycumber said.

Employers and business leaders from across the state voiced their support, including Rosemary Brester of Hobart Machined Products and Don Conant of Valley Nut and Bolt.

Brester said her company started in rural King County fixing farm equipment, and then expanded to making airplane parts and medical components.

“I do all of the taxes and it would every much simplify my process, because it would reduce the amount of error filling out the tax forms, and also having the cost of doing amended returns,” Brester said.

Conant said Valley Nut and Bolt is a family company that will celebrate its 50th anniversary this year, and the company hires and trains people from the local community.

The company’s margins tightened considerably after the 2008 recession, he said.

“We’re struggling,” Conant said. “And we need legislation like this to provide us with some kind of relief. We would really like to see the fourth generation come in and take over the leadership of the company.”

Al Carter of Ocean Gold Seafood in Westport also testified in support of the bill.

“We invest our money back into our operations, back into a small community, in a county that has some of the highest unemployment in the state,” Carter said.

Meredith Neal of the Tacoma Pierce County Chamber told lawmakers that reducing B&O taxes for manufacturers supports manufacturing jobs, which in turn supports families.

“These are good living wage jobs,” Neal said. “Jobs that you can truly support a family with.”

And there’s more than tax relief to help manufacturers’ bottom line, supporters noted.

“The benefit that you’re providing here is not just financial, although that is significant,” said Dave Gering of the Manufacturing Industrial Council. “You’re sending a signal that you care about them, that you’re not afflicting them with one more regulation.”

AWB Government Affairs Director Clay Hill stressed how manufacturing has evolved and how the sector leads to new investment throughout the state.

“Manufacturing is part of the innovation economy,” Hill said. “And culturally it’s really important for your makers, your creative folks, your engineers, your research folks – they are part of the manufacturing ecosystem. So, you invest in manufacturing, you invest in human capital and it’s going to help write a better chapter for the future of Washington.”

The bill now heads to the House Finance Committee for consideration. To learn more or get involved, contact Hill at ClayH@awb.org.

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