Redesigning WA's Tax Structure

by Matt Landers, Director of Public Policy & Government Relations
| Sep 17, 2021
 

The Washington State Legislature established the bi-partisan Tax Structure Work Group to identify options to make our tax code more equitable, adequate, stable, and transparent. The group is not looking to increase or decrease the total amount of tax money collected by the state, but rather examining the combination of tax types that generate the same amount of money. The group is looking at different types of taxes with the goal of improving Washington State's tax structure, and also does not involve local and federal taxes. After several years of research and outreach, the Work Group has a number of options to share with taxpayers. 

In 2021, GSBA has held two editions of our Civic Engagement Series with the Tax Structure Work Group, both of which were recorded and can be viewed on-demand. In February, Dean Carlson (WA Dept. of Revenue) and Representative Noel Frame talked about the existing tax structure in Washington and the goal of the Tax Structure Work Group. In September, Work Group staff shared potential scenarios and the survey for small businesses to provide feedback.

We encourage all our members to examine the potential scenarios and think about what would make the tax system more equitable, adequate, stable, and transparent. All scenarios are intended to be revenue-neutral, meaning they would not increase the total amount of tax collected by the state, but rather re-balance where that money comes from. Some scenarios involve:

  • changing the property tax limit factor
  • decrease property tax and add taxation of personal wealth
  • eliminating the Business & Occupation (B&O) tax and replacing it with some combination of a value-added tax (VAT), a margins tax, and/or an employer compensation tax
  • eliminating the B&O tax and lowering sales and property taxes by adding personal and corporate income taxes, which themselves could be either flat (one rate for everyone) or progressive (higher rates for higher incomes)
More details on what these tax structures mean can be found in the recording of GSBA's September Civic Engagement series as well as in a series of upcoming regional town halls conducted by the Tax Structure Work Group. This series of virtual events allows any taxpayer - not just accountants or tax experts - to hear from the Work Group, ask questions, and explore the scenarios in an interactive context.

Once you feel comfortable with the concepts involved, small business owners and entrepreneurs are invited to take a survey sharing their thoughts and ideas for these scenarios. They are looking to understand the views of taxpayers around Washington on how to improve our tax system. You can take the survey at TaxWorkGroup.org/survey.

GSBA has often heard strong opinions about taxation from our membership - especially the B&O tax on gross receipts. This work offers a chance to reform that system, and we urge everyone to take the time to share their thoughts with the Tax Structure Work Group.