Special Report: Using Tax Policy to Promote Economic Vitality

Our latest Special Report, "Using Tax Policy to Promote Economic Vitality," offers a comprehensive look at Washington's system of business taxes and tax preferences. You can read the report here.

Too often, tax preferences are portrayed simply as "breaks" that give certain industries and/or companies special (possibly unfair) treatment. But as our report shows, these preferences play a crucial role in keeping Washington competitive with other states for jobs and economic activity that could very easily go elsewhere.

Here are some highlights of our report:

  • The state and local tax burden, and the types of taxes paid, are key factors of business success.
  • In Washington, businesses pay 58 percent of state and local taxes; the national average is 44 percent.
  • Washington state ranks sixth highest in business taxes per-employee.
  • Our Business & Occupation (B&O) tax raises more per employee than most other states raise through income taxes on business profits.
  • Our state business taxes rank high, but adjustments to the tax code mitigate their impact.
  • Business tax adjustments are called “preferences” but often exist to create fairness, not favors, and to protect existing Washington jobs or to attract new ones.
  • Many competitor states reduce corporate income taxes on out-of-state sales.
  • Research and Development tax incentives can have spillover effects benefiting the general public.
  • Sales tax exemptions for new data centers have boosted overall tax collections in rural communities.
  • Tax preferences have secured our region’s commercial aerospace leadership for decades.
  • The many national firms that started in Washington state attest to a success formula which includes a tax code that, while imperfect, nonetheless fosters business and job creation.

Click here to read the full report.

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