The State's Business & Occupation tax (B&O) remains one of the worst taxes ever anywhere. Its base of gross receipts penalizes small business, growing business, in-state business, investing business. But worse is the myriad of baby B&Os that dot the Puget Sound region in the revenue architecture of three dozen cities. These baby B&Os are taxes separate in form and application from the State's version and until recently from each other. Their main purpose seems to be to create complexity, inefficiency and resentment.
So personal consistency was abandoned this week when I dropped a memo on Tacoma's Revenue Task Force proposing an expansion of the city's B&O as an alternative to city manager Eric Anderson's property tax based initiative. The memo is in two parts, a critique of Anderson's proposal and an outline of the alternative.
The alternative uses a reformed city B&O to target bigness and nonprofits, both of which are underrepresented at tax time. It drops well more than half of the smaller businesses from the rolls and thereby reduces compliance problems and further mitigates some of the bias of the State's B&O. Plus, it dispenses with a statutory dance with the legislature needed to squeeze the holdings of nonprofits into the city manager's proposed property tax base.
Of course, it is all still in the conceptual stage. The reception was pretty good at the Task Force meeting. But questions were many, and there was the requisite challenge from the Chamber of Commerce representative. At least it opens up the range of options. And it certainly enlivened the debate.