Opinion, Rep. Vicki Kraft: Encouraging small business growth

Rep. Vicki Kraft

This year, thousands of small business owners in Washington state are facing potential tax increases. This means less money for them to reinvest in their businesses to sustain and grow jobs.

Many small businesses simply do not have the resources they need to juggle all the federal, state and local taxes. It is often believed that businesses alone bear these burdens, but the cost is also borne by the people. Consumers pay higher prices in the marketplace and businesses are unable to grow and offer more job opportunities in our communities.

Rep. Vicki Kraft, Washington State Legislature, 17th District

Regrettably, many policy makers think businesses are not paying “their fair share.” According to the Washington Research Council, Washington businesses pay almost 58 percent of all state and local taxes. These taxes help pay for important public services like schools, social work, prisons, roads and much more. By lowering, not increasing tax burdens, we can encourage economic development. This will keep and attract small businesses, which in turn, generates increased tax revenue for our state.

Any owner can tell you, keeping a small business afloat is extremely difficult. It is even more difficult if you’re hit with new taxes. House Bill 1550 would increase Business and Occupation (B&O) taxes for thousands of service industry businesses. Supporters would like to raise the B&O rate from 1.5 percent to 2.5 percent. This would affect everything from realtors, accountants, beauticians, to janitors and even funeral parlors. Because the B&O tax is applied to gross receipts, businesses pay the tax regardless of whether or not they’re profitable. This would place an even bigger burden on the backs of small businesses and, in many cases, force them to increase the cost of the services they offer.

Here is the current argument by some policy makers — we need to provide more funding for K-12 education. Increased B&O taxes have been proposed as part of a potential solution to fund teacher salaries, potentially solving one piece of the State Supreme Court’s McCleary education funding decision. I agree we need to fix our inequitable education funding system. However, we cannot fund education or grow our economy if we are choking the goose that lays the golden egg.

Rather than draining the bank accounts of small businesses, we should be doing all we can to nurture and grow them. Here are a couple of good pieces of legislation that would do just that:

House Bill 1352 is being hailed as the “Small Business Bill of Rights.” The proposal is designed to ensure rights and protections for small businesses are adequately adhered to, and implemented, by state agencies. Agencies like the Department of Agriculture, Department of Ecology, and others would be required to identify the current rights protecting small business owners for inspection, audits and other agency enforcement. The challenges this bill addresses includes stopping unnecessary costs and delays that occur when small business owners participate in audits and inspections. It also reaffirms small businesses are more likely to bear a disproportionate share of the regulatory costs and burdens of these inspections. This type of legislation could go a long way in promoting efficiency and economic vitality for small businesses across our state.

The Washington Rural Jobs Act seeks to encourage future small business economic growth, both in the short and long terms. Introduced this session, the bi-partisan legislation proposes using a mixture of federal and state resources to help mid-level businesses get the capital they need to grow. House Bill 1422, and its companion Senate Bill 5208, would help kick-start smart economic growth strategies in rural areas, especially for small businesses looking to go to the next level.

Along with federal resources, additional state provided tax incentives would encourage rural growth financing for small businesses. A tax credit would be given to business lenders making eligible contributions to rural economic growth. Ideally, this type of loan would create new jobs by taking a business from 4-5 employees, to 15-20. Although it is unlikely this proposal will be signed into law this year, my colleagues and I are already discussing how we can move bills like this forward during the next legislative session.

I believe by focusing on state government fiscal accountability and improving our business climate, we can restore confidence in our business community and with the people we serve. As always, it’s great to hear from you. Please feel free to share your ideas, comments or concerns for how we can implement policies to stimulate job growth and make our economy stronger.

I encourage you to come to Olympia for a visit, email me at vicki.kraft@leg.wa.gov, or call (360) 786-7994 to share your thoughts and concerns about state government. Thank you for the opportunity to serve you.





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