SB 6542, a bill to promote fairness and reduce the Business and Occupation tax on manufacturers

By JASON MERCIER  | 
LEGISLATIVE MEMO
|
Feb 5, 2018

Download file Download the full legislative memo here

Proposed bill would promote investment and job opportunities and help working families in Washington state 

Introduction
SB 6542 is a bipartisan bill introduced by Senators Baumgartner, Hobbs, Mullet, Fain, Short and Wilson.  The bill would lower the Business and Occupation (B&O) tax rate imposed on manufactures so these companies would pay the same competitive tax rate as The Boeing Company.

SB 6542 represents the second attempt by lawmakers to enact this tax relief for manufacturers in the past year. Last year a similar bill (SB 5977) passed by wide margins but was partially vetoed by Governor Jay Inslee on July 7, 2017. It is not clear why the legislature did not attempt to override that surprise veto, since the tax cut bill passed with a vote of 33-16 in the Senate and 83-10 in the House. 

Proposed B&O manufacturing tax cut was vetoed in a surprise move last year 
Last year SB 5977 passed as part of the hard-negotiated 2017-19 state budget deal. The governor’s veto came as a surprise. The governor said he was not part of the final budget talks, did not consider himself bound by the deal reached, and thus did not believe his surprise veto violated the state budget agreement. 

The governor said in his veto of the manufacturing tax cut: “. . . these tax reductions should be considered in a thoughtful, transparent process that incorporates public input and business accountability.”

It is worth noting the original SB 5977 was introduced as a “title only” bill, with the text being filled in later. This year’s tax cut proposal (SB 6542) was introduced with its full text on January 23, providing adequate time for lawmakers to consider it this legislative session, and to satisfy the governor’s transparency concerns about last year’s budget deal. 

Download file Download the full legislative memo here