We have filed an initiatives that we believe will help the economy and the residents of Washington. We need your support in order to:
• Obtaining 325,000 signatures.
• Financing these initiatives. Please assist us by Forwarding this e-mail or send the information to the members of your organization.
• At a minimum would we ask that you consider endorsing either or both of these initiatives?
This initiative replaces the B&O Tax with a flat rate corporate tax not to exceed 5% (national average is 6.6%).
Website is http://home.comcast.net/~businessandoccupationtax/site/?/home/
The second initiative provides every resident in the State of Washington with full medical coverage.
Website is http://home.comcast.net/~healthcareinitiative/site/?/blog/
Key Points for Implementing these initiatives are as follows:
B&O TAX PROBLEMS - WHAT YOU MAY OR MAY NOT KNOW
The Washington State Research Counsel states, that: "No sensible case can be made for imposing gross receipts taxes in the modern economic environment. The old turnover taxes, typically adopted as desperate measures in fiscal crisis, were replaced with taxes that created fewer economic problems. Gross receipts taxes should never be seen as an element of positive tax reform. They were abandoned for good reason. One reason for the high tax burden placed on business in Washington is the business and occupation tax. This is a truly unique aspect of the Washington tax system and is the most significant gross receipts tax remaining in the nation."
The major concerns regarding the business and occupation tax:•
• A tax on all gross revenues incurred by a business, not just the profits.
• A tax on a business whether they make a profit or not. For example, if start a business and in the first month generate $10,000 in sales but my cost of doing business (cost of materials, labor and overhead) is $20,000 I must pay taxes on the entire $10,000 in sales, even though my business is operating at a $10,000 loss. Because of this we have one of the highest business failure rates in the nation.•
• Since business are being taxed on the gross sales they pay tax on top of their federal and local taxes (double taxation). In addition, there are 32 cities in Washington that operate their local taxes on the B&O structure. In this case the business experience triple taxation.
• RCW 19.275.030 states that no person may establish, promote, operate, or participate in any pyramid scheme and yet our business and occupation tax is a pyramid tax. The business and occupation tax is imposed on each stage of the service or product and creates a pyramid effect which is in turn passed on to the consumer.
The flat rate corporate tax is a tax on the profit, which encourages growth and capital investment. For example, if a business has to pay $20,000 in taxes, the flat rate corporate tax allows the business deduct expenses and capital investments, which is not possible with the current B&O Tax. The flat tax allows the company to spend $10,000 for a new piece of equipment and deduct the cost from the tax burden. Now we have encouraged capital investment. More than likely the company will need to hire an individual to operate the machinery. As a result, we are creating a tax structure that will create jobs.
There are only four states that have a gross receipts tax. Below is a comparison of the states that have a gross receipts tax:
1. Delaware: Retail can deduct eighty thousand dollars per month. Manufacturers can deduct one million dollars per month.
2. Kentucky: Business can choose between gross receipts and gross profits. Business under three million dollars is exempt.
3. Ohio: Business under one hundred fifty thousand dollars is exempt and those businesses with receipts between one hundred fifty thousand dollars and one million dollars pay one hundred fifty dollars.
4. Washington: The worst tax of all four gross receipts tax states. Business under twenty-eight thousand dollars is exempt.
State officials also have to be cognizant of the fact that they are not only competing against each other for investment and jobs, but against the rest of the world. The emerging low-tax countries in Europe and Asia benefit from the United States remaining a high-tax country.
In the past two months, at least six countries have announced plans to cut their corporate tax rates: Canada, Hong Kong, Korea, South Africa, Spain, and Taiwan. In an interview in the Korea Times, Choi Kyung-hwan, a member of the new administration's presidential transition committee, said: "The corporate income tax reduction is not a matter of choice, but a matter of life and death for Korea in an increasingly globalized business environment."
In order for the state of Washington to economically compete in the global market, we need to revive manufacturing and business. In order to do this we must eliminate the business and occupation tax, which discourages capital investment by our businesses and discourages purchases of capital equipment that are directly related to growth. This is not a good strategy for economic growth and development.
Join Citizens to Replace the B&O Tax: for contributions, please make checks payable to:
Citizens to Replace the B&O Tax,
14416 168th Street, Orting, WA 98360
Join Citizens for Affordable Healthcare: for contributions, please make checks payable to:
If you have any questions, please feel free to call us at 253.241.9634
Jim Vaughn