In late January the Senate Ways and Means Committee and House Finance Committee held a joint hearing to receive testimony from JLARC staff and Commission members on the Citizen Commission for Performance Measurement of Tax Preferences’ latest report.

During the hearing Senator Karen Fraser asked me whether there existed a report or study which aggregated B&O tax rates by economic sector, then looked at what percentage of the business activity within each sector is taxed. She particularly asked whether the application of the B&O tax is uniform across business sectors and, if it is not, whether there is a rational reason why B&O taxation differs from one sector to another.

At the hearing I said Washington Policy Center would be happy to look into this question and provide her with a response. With the assistance of Research Assistant Betsy Hansen, I assembled the following information and sent it Senator Fraser. Since the fair application of the B&O tax is of broad interest to lawmakers, we are forwarding this information to all members of the legislature.

This research is particularly timely in light of recent legislation to enact a new major tax break for one type of business: a significant reduction in the B&O tax paid by newspapers for their online business.

Read the full Legislative Memo here