As the state Legislature again grapples with a budget deficit, there is talk in Olympia of tax increases on small businesses to fund education.
They don’t call them tax increases, of course; they are couched in rhetoric to throw dust in our eyes and confuse us. But believe me, they are tax increases; what is worse is the harm those taxes will do to our economic recovery.
My industry, along with many other small businesses, experienced a business and occupation (B&O) tax increase during the deepest part of the recession and housing downturn in 2010. At least there was the reassurance that the Legislature said it was temporary and would expire on June 30, 2013.
Gov. Jay Inslee has proposed a state budget that would make that temporary B&O tax increase permanent, insisting it is not a tax increase. Many of us disagree. The Washington Association of Realtors recently sponsored an Elway poll question that asked if extending a temporary tax was a tax increase or not, and a majority of voters answered that it is a tax increase.
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The state House is also proposing to make the B&O tax increase permanent in its version of the budget. Like the governor’s proposal, the increase narrowly focuses funding for a top statewide priority by taxing a small sector of business services that includes barbers, accountants, real estate agents, beauty salons, undertakers and dozens of other small business categories. Those are businesses that are just barely recovering, just starting to hire again.
Small business owners are breathing a sigh of relief lately as the economy improves, yet we move ahead with a great deal of caution tempered by the harsh challenges of the last several years. To survive, we revised our business plans and trimmed our family budgets. People had to put off buying a home, and many of my colleagues lost half of their business. We had to cut back to survive and recover. We want government to do the same.
There is a better way to fulfill our state’s obligation to fund education and balance the budget without taxing struggling businesses that provide most of the jobs, the lion’s share of revenue for governments and so many of the services our families need and enjoy.
The Senate approved a budget with a strong bipartisan vote that funds education without raising taxes on businesses that already shoulder so much of our tax burden. The Senate budget recognizes that our economic recovery is dependent on those businesses and keeps its promise that a temporary tax is temporary.
Legislators will be considering these budget ideas and negotiating the final state budget in the coming weeks. For the sake of our full economic recovery, let’s hope they pass a reasonable budget like the Senate budget that meets our obligation to fully fund education while allowing small businesses in Washington to thrive once again.
That’s the budget that will ensure our state’s prosperity and future.
Mark Kitabayashi, a Puyallup real estate agent, is the president of the Washington Association of Realtors.