Lower B&O taxes for manufacturers proposed to help reverse job losses

A bipartisan group of lawmakers are hoping to revive a reduction in the state’s business and occupation tax for manufacturers and reverse the trend of significant job losses in the sector. The proposal would implement a 40 percent reduction in the tax rate for manufacturers, which passed with overwhelming support during the 2017 legislative session, but was ultimately vetoed by Gov. Jay Inslee.

“Washington’s manufacturing sector has lost more than 50,000 jobs this century,” said Sen. John Braun, R-Centralia, who sponsored and negotiated the 2017-19 budget which originally included the change. “Manufacturing jobs are critical to helping rural and suburban areas experience some of the same economic success urban communities have seen in recent years. We know we can afford this strategic investment since we paid for it in the current budget and are now projected to collect $1 billion more than we expected just seven months ago.”

The legislation phases in a reduction from a tax rate of 0.4840% down to 0.2904% by lowering it 10% annually over four years. That would bring all manufacturing businesses down to the same rate paid by Boeing and other aerospace businesses.

Manufacturing employment is the only sector in Washington to see job losses in the 21st century.  Of the jobs lost, 47,200 have been outside of the aerospace sector.

The new proposal includes a tax preference performance statement which highlights that the change is intended to create and retain jobs, improve industry competitiveness, and reduce structural inefficiencies.

Lawmakers are on day 16 of a short 60-day legislative session scheduled to end March 8.