NFIB Members Called to Action After Governor Releases His Budget

Date: December 13, 2018

Related Content: News State Budget Taxes Washington

A $3.7 billion tax hike not the holiday surprise small-business owners deserve

The same day he announced it, NFIB Washington wasted no time in putting out an e-blast to its members asking them to take action to stop Gov. Jay Inslee’s proposed state budget for 2019-2021—a budget calling for small-business owners to pony up $3.7 billion in additional tax money.

Click here to read the Call to Action and the steps to take.

In it, you’ll read the following analysis from NFIB Washington State Director Patrick Connor of just what’s at stake:

“Gov. Jay Inslee released his 2019-21 budget plan on December 13. The proposal would boost state spending 21% and pay for it by increasing taxes on your small business.

The centerpiece of the governor’s $3.7 billion tax hike would raise B&O taxes on services from 1.5% to 2.5%, generating $2.6 billion for state coffers. That’s an increase of 67%!

This massive tax increase not only affects service businesses, but it would also affect every business that uses those services as well. A B&O service-tax hike would impact accounting, legal, architectural, engineering, and other services (likely janitorial, landscaping, etc.) – many of which small businesses use themselves and incorporate into goods or services they sell to consumers.

Consumers could suffer a double-whammy if business-to-business services are taxed, since those services would be taxed twice (or more) before the final sale to a customer. For instance, a home builder may now have to pay tax on architectural and engineering services used to create blueprints. The same home builder would also pay taxes on the legal work to draw up construction contracts, and the accounting services to generate invoices and issue payroll checks to the crew. Additional taxes could apply to any cleaning, landscaping maintenance, or even real estate services the builder uses to get the home ready for sale. That all adds to the cost of building the home, increasing the final price to the homeowner.

Similar tax pyramiding – charging tax on services used during the creation of a product or service – could apply to almost every other good or service offered for sale to customers.

Also, keep in mind that these tax hikes would be in addition to other cost increases that have or will soon take effect: on January 1, the minimum wage will increase to $12, workers and many business owners will pay a new Paid Family & Medical Leave payroll tax; paid sick and safe leave took effect this past January 1; new overtime rules are expected to be in effect January 1, 2020, along with another minimum wage hike to $13.50.

Small business owners need to contact Gov. Inslee and their local legislators immediately. Tell lawmakers small business can’t afford another hit like this.

And, with record revenues, the state should easily be able to meet its spending obligations within existing resources.

Related Content: News | State Budget | Taxes | Washington

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