Today’s Loser: State Sen. Steve Hobbs.
Hobbs (D-44, Lake Stevens) is one of the six sponsors of a bill that was introduced in the state legislature today that would simplify the business and occupation (B&O) tax system.
The bill was filed at the request of Gov. Chris Gregoire, who announced the idea last week: Much like the sales tax, where the state collects the tax and distributes it back to cities, the state would become the sole collector of all local B&O taxes, taking the administrative function away from all the individual cities who administer the tax and redistributing the money back to cities.
As Erica reported earlier this week, the change could cost Seattle up to $43 million. The idea is to streamline the B&O tax for businesses. Currently, for example, if a company does business in more than one city it may have to pay B&O taxes to multiple cities, which could all have different methods for calculating the tax.
Why is Hobbs a loser? Because he’s running for US Congress during a recession when helping out small businesses is likely to be a major theme—and in reality, this idea could backfire. Right now, most cities don’t even collect B&O taxes (only 39 of 207 cities do). One thing that may be inhibiting cities from collecting the tax is the administrative costs. Now that the state is offering to do it for them, it’s likely more cash-strapped cities— like those in the 1st Congressional District, where Hobbs is running as a pro-business candidate—will ask businesses to pay up. Ouch.
Today’s Loser: Suzan DelBene
DelBene is also running for Congress in the 1st District. And her name is also associated with the bill. DelBene is the director of the department of revenue and made the case for the bill at a press conference.
Go the 15:07 minute mark of the video, and you’ll see Gregoire and DelBene are forced to answer a poison pill question about the possibility that their plan to save small businesses may actually give cities that currently don’t have the infrastructure to “hassle” (as Tacoma News Tribune reporter Peter Callaghan puts it) with collecting the tax an incentive to now take the “free money” and start taxing small businesses.
Gregoire says she “doesn’t know” and turns the mike over to DelBene for an answer.
DelBene comes up to the podium and simply repeats the main argument—that the system is complicated—and says only that “that wasn’t an issue.”
We suppose we’ll see.
And even if it doesn’t backfire, and small businesses are psyched about the change, neither candidate will be able to use the issue as an arrow in their quiver against the other.
*It’s also worth noting, given Erica’s article on Monday—linked above—about how Seattle city hall is angry about the legislation because of the potential costs to the city coffers, that the house sponsor of the legislation is Seattle Rep. Reuven Carlyle (D-36, Queen Anne).
We talked to Carlyle about it, and he said: “There a consensus in the house that the proposal is aggressive and threatens the integrity of cities control of their taxing authority. At the same time, there’s some very well drafted work in the plan making the B&O simple and easy, and we’re convinced that ultimately there’s a win-win.” He says he “jumped” on as a sponsor, so he could make the legislation work and have the city of Seattle’s interests “front and center.”
