Inslee's tax hikes: Business owners pay the price

Re: “Taxes: Governor’s proposal good path forward” (TNT letters, 1/21).

Reading the letter writer's approval of Governor Inslee's new tax proposals, I felt I needed to make clear that the 1% increase (to 2.5%) in business and occupation tax on service businesses is a tax on gross receipts. Many, if not most of these businesses are small and family owned. Even if the number of employees are small, staff salaries are often the single biggest expense, and when combined with other costs of doing business, overhead can easily reach 75, 80 or 85% of revenue. Maybe even more.

All of a sudden, that 2.5% B&O tax becomes a large portion of the salary paid to the business owner. At 80% overhead, 2.5% becomes a 12.5% tax on the personal income of the proprietor. This tax is due even if you operate at a loss. Also, take heart that those same self-employed business owners must pay income tax on the same health, disability and life insurances that are provided to employees pre-tax.

Rubber stamping Inslee's tax increases to meet demands for more state services comes at a cost.

This story was originally published February 9, 2017 at 5:01 PM with the headline "Inslee's tax hikes: Business owners pay the price."