Chapman, Maycumber introduce B&O tax relief for manufacturers
A bipartisan pair of lawmakers introduced a bill this week aimed at boosting Washington’s manufacturing sector.
House Bill 1249, introduced by Reps. Mike Chapman, D-Port Angeles, and Jacquelin Maycumber, R-Republic, would create a standardized business and occupation (B&O) tax rate for most manufacturers, amounting to a 40 percent reduction in the B&O tax for thousands of employers.
“The vast majority of manufacturers are small businesses, including many family firms,” said Clay Hill, AWB’s government affairs director for tax and fiscal policy. “These are the people that create jobs and invest in our communities, and yet we know that manufacturing is the only sector that’s lost jobs since 2000.”
The legislation would set the B&O tax rate for most manufacturers at 0.2904 percent, which is the same rate paid by the aerospace and timber processing industries. This means family employers like shipbuilders, furniture makers, commercial printers and metal manufacturing shops can expand, create jobs and invest in new equipment. The bill would apply the rate statewide, with no geographic restrictions, throughout all of urban and rural Washington.
The bill had yet to be assigned to a committee as of Wednesday afternoon. Hill said he hopes it will receive a hearing in the House Finance Committee chaired by Rep. Gael Tarleton, D-Ballard.
The bill would also extend the current tax rate for the timber and wood products industry which is set to expire in 2024. The new law would take effect on July 1, 2019.
A recent survey of AWB’s manufacturing members cited state and local taxes as a major obstacle. According to the survey:
· Eighty-one percent would not recommend Washington as a place to locate a manufacturing business
· Seventy-three percent cited the state and local tax burden as the key reason
· More than half, or 56 percent, said they would hire more people if the B&O rate was reduced. Other respondents said they would invest in equipment, workforce training and retention.
Washington’s manufacturing sector creates a strong middle class. For $1 spent on manufacturing, another $1.89 is added to the economy, which is the highest economic multiplier of any sector.
In 2017, the average U.S. manufacturing job paid nearly $85,000 a year in salary and benefits. And, manufacturers have one of the highest percentages of workers who are eligible for health insurance, at 92 percent. Both the salary and health benefits eligibility rate are significantly higher than other industries.
To learn more, contact Hill at 360.943.1600 or ClayH@awb.org.