Latest news with #B&Otax
Geek Wire
26-06-2025
- Business
- Geek Wire
Bold or boneheaded? Seattle's proposed tax hike on big business draws fire as Amazon stays silent
Downtown Seattle (GeekWire Photo / Taylor Soper) Supporters call it bold. Critics call it boneheaded. A new effort to raise taxes on large businesses in Seattle is generating a wide range of reaction. Mayor Bruce Harrell and Councilmember Alexis Mercedes Rinck on Wednesday unveiled a unique proposal that would reshape the city's business and occupation (B&O) tax that applies to gross revenue. The initiative would temporarily eliminate B&O taxes for small- and medium-sized businesses — including tech startups — with gross receipts of $2 million or less. To offset the revenue loss for the city, large companies would see their B&O tax rate increase by more than 50% — from 0.427% to 0.65% for service businesses. The new tax rules would raise an additional $90 million per year for human services and other city programs. The city says about 90% of small- and medium-sized businesses in Seattle will pay fewer B&O taxes if the proposal passes. Harrell and Rinck framed the proposal as a way to protect Seattle's small businesses while shielding from potential federal funding cuts. They also cited the city's $251 million deficit. Rinck, a former fiscal policy analyst who took office in November, said Seattle's largest companies should 'pay their fair share.' 'We're asking them to contribute to the community that made their success possible — for the infrastructure they use, to the workforce whose labor they rely on, and the working class consumer base who buy their products,' Rinck said at a press conference. 'This isn't punishment for individual success. It's shared community responsibility that comes with shared success.' Jon Scholes. (DSA Photo) Jon Scholes, CEO and president of the Downtown Seattle Association, called it 'a boneheaded proposal of epic proportions' in a post on LinkedIn. Scholes supported exempting small businesses from the B&O tax, currently set at 0.427% of gross receipts for service companies. But he said raising taxes on larger companies 'will ultimately result in Seattle defunding its tax base.' 'This is an unnecessary tax on downtown Seattle's revitalization that comes with big risks to the fragile commercial tax base,' Scholes said. 'As the commercial tax base withers, the tax burden will shift to Seattle residents.' Harrell disagreed with DSA's stance. 'We're not trying to run businesses out of Seattle. We are open for businesses,' he said Thursday. The potential increased tax adds another wrinkle to the dynamic between Amazon — Seattle's largest employer — and city lawmakers. Amazon declined to comment on the new B&O tax proposal. The tech giant's relationship with Seattle began to strain in the years leading up to the pandemic and intensified in 2018 when the city council approved a per-employee payroll tax that targeted large local companies, in an effort to help the city raise tens of millions of dollars to pay for the effects of explosive growth driven by the tech boom. Amazon, which strongly opposed the tax, followed up by pouring money into city council elections and relocating thousands of employees from Seattle to nearby Bellevue, which it now considers part of its 'Puget Sound' headquarters. The city council ended up repealing the original payroll 'head tax' in 2018, and two years later it passed a 'Payroll Expense Tax' also known as JumpStart, which impacts large companies such as Amazon that meet a threshold for annual payroll expense. A streetcar with Amazon One branding moves through South Lake Union in Seattle. (GeekWire Photo / Kurt Schlosser) Jacob Vigdor, professor of public policy and governance at the University of Washington, said Amazon may respond negatively to the B&O tax proposal — 'but when push comes to shove they can pass the cost on to consumers,' he noted. 'When Seattle adopted new regulations for app-based delivery drivers last year, the apps responded by tacking on extra fees,' Vigdor told GeekWire. 'An Amazon purchase that triggers the new B&O tax could be subject to a similar surcharge.' In an interview with GeekWire earlier this year, Harrell explained how he was navigating the delicate balance faced by many city leaders — ensuring that Amazon continues bolstering the local economy and tax base, while addressing the ripple effects on housing, transportation, and communities. 'I've tried to have a very supportive relationship, but also one on mutual accountability,' Harrell said in January. 'And I think it's working out well.' It's not entirely clear how much companies pay in B&O tax, which applies to gross receipts attributable to business activity within the city limits. The mayor's office did not provide data on the number of companies that would have higher B&O tax obligations under the new proposal. 'It's a really wide diversity of businesses,' Jamie Housen, the mayor's spokesperson, said Thursday. 'It's difficult to pigeonhole one particular kind of business.' Some large employers expressed support for the proposal. 'Though mindful of the impact of further tax increases, we appreciate the opportunity to help make Seattle and its small business community more resilient,' Richard de Sam Lazaro, Expedia's senior director of government affairs for North America, said in a statement. The proposal comes after the state passed several new business taxes earlier this year. Kelly Fukai, CEO of the Washington Technology Industry Association, said she welcomes the city's attempt at reducing the tax burden for small- and medium-sized businesses. But she said the proposal 'still fails to address some of the unique challenges that small to medium sized tech startups face.' 'Tech startups are not traditional businesses and the impacts of these tax policies can create unintentional inequities,' she said via email. 'With the recent tax changes enacted by the legislature and compounding local tax changes, our startup community is struggling to determine just how much these will impact their ability to grow.' The B&O tax proposal needs approval from City Council before heading to the November ballot.
Geek Wire
25-06-2025
- Business
- Geek Wire
Seattle mayor proposes B&O tax hike for large corporations, cuts for small businesses
Seattle City Hall in downtown Seattle. (GeekWire Photo / Kurt Schlosser) Seattle Mayor Bruce Harrell and City Councilmember Alexis Mercedes Rinck today announced a plan for temporarily cutting B&O taxes for small- and medium-sized businesses while raising taxes on the city's highest-grossing companies — which includes tech businesses, law firms and big retailers and manufacturers. Large tech giants such in Seattle such as Amazon, F5, Remitly, Expedia and others would be impacted by the proposal. We've reached out to the companies for comment. Smaller tech startups with gross revenue of $2 million or less, meanwhile, would avoid paying B&O taxes. Harrell and Rinck framed the measure as a way to plug holes created by Trump administration reductions of federal support for government programs. The new tax rules would raise an additional $90 million per year for the city's coffers with the funds earmarked for human services. The city already faces a $251 million deficit before factoring in possible federal cuts. Here's what the bill does and its impacts, according to Wednesday's announcement: The B&O tax threshold exemption would increase from $100,000 to $2 million in gross revenue It would create a new B&O deduction for all businesses of up to $2 million on gross receipts Roughly 76% of small- and medium-sized businesses would no longer pay the tax About 90% of businesses overall would pay less than they do currently Larger businesses that exceeded the new $2 million exemption would pay 34 cents per $100 for retail, wholesale and manufacturing, up from 22 cents, while service companies would see a jump from 43 cents per $100 up to 65 cents per $100 for taxable receipts. Before going into effect, the proposal would first need to be approved by the City Council and then go before voters in this November's general election. The new tax structure would be in place from 2026 though the end of 2029, with the possibility of an additional four-year renewal by the City Council. Business leaders offered mixed and largely negative reactions to the proposal. 'Giving a B&O tax break to many Seattle businesses right now is a great idea — one that we have advocated for to help fill empty storefronts downtown, spur small business growth, and to help offset rising costs, including from public safety challenges,' said Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce, in a statement. 'However, raising the B&O on any employer right now is a bad idea.' Smith cited factors that would argue against higher taxes including weaker consumer spending, a drop in international tourism, economic uncertainty due to federal tariffs, and recent state-level tax increases. Jon Scholes, president and CEO of the Downtown Seattle Association, offered a sharper criticism. 'Five years ago, the political chaos in the other Washington led Seattle politicians to give up a city park to anarchy, defund the police, and let tent encampments proliferate,' Scholes said by email. 'City leaders should heed the lessons from the past and reject boneheaded ideas solely concocted in the name of fighting President Trump. This rushed tax proposal is bad fiscal policy that will set Seattle back and raise costs for residents.' Smith also noted there are only 45 days to consider the measure before it would go to voters. In making their pitch, Harrell and Rinck referenced feedback from numerous small business owners who, not surprisingly, cheered the potential change. 'In the context of macroeconomic uncertainty and cumulative financial strain, B&O tax relief means more than just savings — it's a meaningful step toward stability, recovery, and long-term resilience,' said Laura Clise, founder and CEO of the Intentionalist, an online platform promoting small businesses, in a statement. A manufacturing company, for example, earning $2 million of gross revenue currently pays $4,400 for Seattle's B&O taxes, which would drop to zero under the revision. If that business earned $12 million, that amount would jump from $26,640 up to $34,000. A service company grossing $20 million per year would see its taxes rise from $85,400 to $117,720.
Forbes
31-05-2025
- Business
- Forbes
New Washington State Tax Law Threatens Active Traders
Traders with high-volume activity could face tax on gross trading gains—even if they lose money overall. Washington State B&O Tax: Are Traders At Risk? Self created Darren Neuschwander, CPA, and Adam Manning, CPA, contributed to this blog post. Washington State has taken an aggressive stance on taxing investment and trading income under its Business & Occupation (B&O) tax regime. The October 2024 Antio court ruling and the enactment of HB 2081 in May 2025 have reshaped the landscape, potentially pulling active traders—both individuals and entities—into the tax base. The B&O tax applies to gross receipts, not net income. RCW 82.04.080 defines gross income to include trading gains, interest, dividends, and investment income—without deducting trading losses. This poses a major risk to traders with large volumes of proceeds but net losses overall. HB 2081 carved out exemptions for Family Investment Vehicles (FIVs) and Collective Investment Vehicles (CIVs). However, these exemptions are narrowly defined. FIVs are limited to estates, trusts, and certain educational savings plans. CIVs require unrelated investors and external managers—criteria typical hedge funds meet, but not personal or family trading entities. Most active traders operating through husband-wife LLC/partnerships, or S-Corps, will not qualify for either entity exemption. Individual traders claiming federal Trader Tax Status (TTS) and reporting expenses on Schedule C and gains under Section 475 MTM could inadvertently signal 'business activity,' triggering B&O tax liability. We submitted a formal letter to the Washington Department of Revenue requesting guidance on whether traders are considered 'engaged in business' under state law and whether net trading results—not just gross gains—can define the taxable base. Washington-based traders seeking federal tax savings through TTS may now face unexpected state tax obligations. The situation demands clarity from the state and awareness among traders. Please look at the longer-form version of this blog post on which includes a letter I sent to the WA DOR.
