How Seattle’s tax burden affects different businesses

By: Emily Makings
9:58 am
December 31, 2018

In the Seattle Times, Benjamin Romano writes about the high cost of doing business in Seattle, compared to other cities in the state. (A separate article lists new and increased taxes and regulations that have been enacted in Seattle recently.) The story gets at a point we make regularly (see here, e.g.)—that it is the accumulation of taxes and regulations that is especially burdensome for businesses.

The story includes a calculator that allows readers to see what business taxes and fees would be for a business in Seattle, Spokane, Tacoma, Vancouver, Bellevue, Kent, Everett, Renton, Kirkland, and Redmond. Users can choose the type of business (retail, services, manufacturing, or wholesale), amount of gross revenue, number of employees, and taxable business purchases in the calculation. The calculator includes only local business and occupation taxes, sales taxes, head taxes, and business license fees—it does not show the full business tax burden. Still, it’s interesting to compare how the impact of these four types of taxes changes depending on a business’s location.

As Romano writes,

It shows Seattle’s taxes are indeed the highest, driven mostly by the city’s business and occupation (B&O) tax rates . . . .

A typical grocery store doing $20 million in sales in Seattle would pay about 45 percent more in B&O and sales taxes and business-license fees than the same store in Tacoma, according to the Times analysis. The Seattle bill for those taxes is more than twice what it would be in Everett and more than triple the bill in Renton or Kent. (The analysis omits local property and utility taxes, as well as taxes on specific business types or products such as hotels and the Seattle beverage tax.)

For more information on local taxes in other cities, the Association of Washington Cities has a detailed look at municipal taxes and fees (the most recent survey was completed in 2016).

Categories: Categories , Tax Policy.