Revitalizing Washington’s manufacturing industry with tax cut

Revitalizing Washington’s manufacturing industry with tax cut
A group of 24 House Republicans have reintroduced a proposal to reduce the business and occupation tax rate on manufacturers originally included in the 2017-19 operating budget and later vetoed by Governor Jay Inslee. Proponents say stronger, more vocal support from industry members could help it survive this time around. Photo: University of Connecticut

During last year’s legislative session, the longest in state history, lawmakers approved a 2017-19 operating budget that included a reduced gross receipts tax, or business and occupation (B&O) tax, on manufacturers that would match the rate paid by Boeing and other aerospace companies. The provision was vetoed by Governor Jay Inslee, who wrote in his veto letter: “these tax reductions should be considered in a thoughtful, transparent process that incorporates public input and business accountability.”

Now lawmakers will have the opportunity to do just that with the introduction of similar legislation by House Republicans, HB 2393 which would lower the B&O manufacturing tax rate to 0.2904 percent – the same rate given to Boeing. The proposal’s primary sponsor is Rep. Brandon Vick (R-18), and 23 Republicans are cosponsoring the bill.

In an online radio interview, Vick described the legislation as “basically identical to what we passed in the operating budget last year.

“We keep talking about the folks who are struggling but we’re not doing a whole lot to help them out, he continued. “A tax rate like this is going to bring those jobs to folks who not only are low-skilled but in high-skill and unique areas” as well.

Vick’s district includes Clark County and the city of Camas, where a pulp mill operating since before Washington’s statehood is slated to close. The health of the state’s manufacturing industry has been an ongoing concern for legislators and was the focus of a work session late last year.

In 2015, the state had 6,5000 manufacturers, with 286,300 jobs. Although the actual number of jobs has increased since 2000, its percentage of the workforce is down from 12 percent to 9 percent, according to a report by the Economic Revenue Forecast Council (ERFC). A variety of reasons, from environmental policy to over-emphasis on higher education-related careers, have been cited for its decline.

During a November work session, industry members said it’s often hard to find qualified applicants for jobs, which don’t carry the same societal respect as white-collar jobs.

It’s an issue Inslee highlighted in his State of the State speech while proposing further funding for the state’s Career Connect Washington Initiative. “We have to stop telling our children that a four-year degree is the only path to success. That simply is not true.”

In a statement, Vick said the state can help revitalize the manufacturing industry by easing its tax burden. “We could use more family-wage jobs in these areas, including Clark County. The reality is our manufacturing industry is not able to keep up with other sectors with the tax code as it is currently written.”

However, Inslee may once more veto the bill as he did its predecessor; a spokesperson told Lens he has yet to review the bill.

Nevertheless, Vick says the way to prevent another veto is by having industry members speak out. “We want folks to get a hold of their legislators, to get a hold of the governor. We want the business community to be vocal with us.”

“The business community does great things in this state, and they’re busy making money, and we need them to take a little bit of time out as well and come out and talk about how important this is for them,” he said.

The bill has been referred to the House Finance Committee chaired by Rep. Kristine Lytton (D-40), but no public hearing has been scheduled.

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