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Proposed B&O tax break for startups advances

Legislation that would exempt new Washington-based businesses from the state's B&O tax in their first year of operations has cleared a key Senate committee.

Senate Bill 6327, sponsored by state Sen. Mike Padden, R-Spokane Valley, advanced with a “do pass” recommendation from the Senate Economic Development, Trade and Innovation Committee. It's now waiting for consideration by the Senate Ways and Means Committee.

Under the measure, news businesses with fewer than 25 employees would enjoy the exemption for two years, plus a 50 percent reduction on their B&O tax bill in their third year of operations.“This measure would make it clear to entrepreneurs inside and outside of the state that legislators want our small-business employers to succeed and that Washington is open for business,” said Padden.

Legislative analysts predict the exemption would cost the state about $2.9 million in lost tax revenue in 2013 and $10.6 million in 2014.

The state's business-and-occupation tax, often called a gross-receipts tax, is heavily criticized on both sides of the partisan aisle because it targets gross revenue rather than profits. The rate differs by industry but all companies are given an exemption on their first $250,000 in revenue each year.

Padden and other backers argue that giving new companies a break could help business startups survive those critical first years in Washington, which currently has the nation's second-highest rate of startup failure.


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The Spokesman-Review business team follows economic development in Spokane and the Inland Northwest.

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