Washington Business Fall 2017 | Legislative Review & Vote Record | Page 49

issue area reports | taxation
municipal general business licenses in the
Department of Revenue’s ATLAS program.
After years of work and tight negotiations
with the cities, this AWB legislative
objective received a strong bipartisan vote
count in both chambers of the Legislature.
HB 2005 continued the work of 2016
legislation (HB 2959) and implements
many of the recommendations issuing from
the HB 2959 interim task force. In addition
to consolidating local licensing, HB 2005
established a local apportionment task
force made of representatives from cities
and AWB business members. The task force
is scheduled to meet over the next year.
SB 5866/SJR 8209
establishing a tax court
in washington and making
constitutional changes
Failed/AWB Supported
Senate Bill 5866 and the accompanying
constitutional amendment Senate Joint
Resolution 8209 both sponsored by Sen.
Sharon Brown, R-Kennewick, would have
established a tax court in Washington
state. These bills build off Senate Bill 5449
from last year, yet reflects changes based
on feedback from various legislators and
stakeholders. SB 5866 passed of the Senate
Floor with a strong bipartisan vote, but
failed to receive a hearing in the House.
The bill would have improved fairness
for taxpayers, promoted due process and
improved our state’s ranking from the
Council on State Taxation from a C+ to an
A-. A top priority for AWB is to provide
an independent process for appealing tax
assessments while allowing taxpayers to
appeal without prepayment requirements.
Now that the Department of Revenue
has clarified that they do not conduct
Bill considered as part of
AWB’s voting record
Ron Bueing, at right, Roger Flygare, center, and AWB’s Eric Lohnes testify before the House
Finance Committee.
independent reviews, this case is more
important than ever. AWB will be back in
strong support of this concept in 2018.
HB 1550/SB 5113
b&o tax increase
Failed/AWB Opposed
Both House Bill 1550 and Senate Bill
5113 were governor-request companion
bills officially requested by the Office of
Financial Management. The bills sought
to add an additional tax rate of 1 percent
to the services and other activities of
the business and occupation (B&O) tax
classification, increasing the total rate from
1.5 to 2.5 percent. The bills also would have
increased the filing threshold for businesses
paying under the service and other activities
classification of the B&O tax to $100,000, and
increased the small business tax credit to $125
for businesses paying under the service and
other activities classification on July 1, 2017,
and for all other businesses on July 1, 2018.
This tax policy change would have increased
Favorable outcome for
Washington businesses
taxes on service and other industries by $2.3
billion in 2017-19 and $2.6 billion in 2019-21.
HB 1730/SB 5111
capital gains tax
Failed/AWB Opposed
Governor request legislation House Bill
1730 and Senate Bill 5111 were another
attempt at creating a capital gains tax in
Washington. This proposal would have
created a 7.9 percent tax on capital gains. As
has been the case previously, the proposal
was attempted to be framed as an “excise
tax” in order to work around the state’s
prohibition on graduated taxes on income.
There are a number of reasons this is
problematic. Washington would be the only
state to treat a tax on capital gains as an
excise tax, and not an income tax. The IRS
treats capital gains taxes as an income tax.
Also, capital gains taxes are volatile, they
create a disincentive for investment, and
are on dubious legal ground in Washington.
Capital gains taxes were also included in
Missed Opportunities
special edition 2011 47