Taxing Times — In the New Year, the Legislature Must Balance a Growing Budget Deficit
The 2010 Washington state legislative term was extended by a special session as the House and the Senate battled over whether to raise sales taxes as part of balancing the budget. While the Legislature did not raise sales taxes, it did pass a final budget in April that included an $800 million package of piecemeal tax increases, which contained the largest number and most wide-ranging set of tax changes seen in the state in at least a decade. The biggest increases (in terms of new tax revenue) were directed at the service sector. This included a temporary 20 percent increase in the service business and occupation (B&O) tax rate, and a permanent change in the method that service businesses must use to calculate the portion of their gross receipts that are taxed as Washington revenue.
This article first appeared in Seattle Business magazine.