Virtual Conversation | 2021 Re-Wire Policy Conference, Dec 15, 2021 Register

Rep. Frame squares off against AWB on B&O tax cuts

In a Twitter thread posted Thursday morning, Representative Noel Frame accused the Association of Washington Business (AWB) of “some seriously breathtaking hypocrisy” over their call to bridge the urban-rural divide, and their simultaneous opposition to a rural B&O tax reform bill. AWB says that while they fully support lowering the B&O tax rates for manufacturers, they believe tax relief should apply to all counties, not just the 30 counties specified in the bill.

On Tuesday, AWB Tweeted out a statement from Kris Johnson, president of the Association of Washington Business, about his final thoughts on the 2018 legislative session. In the statement, Johnson says,

“We are disappointed legislators did not do more to address Washington’s urban-rural economic divide…At the top of the list is the Legislature’s failure to support manufacturers by lowering the business and occupation (B&O) tax rate.”

“This year, lawmakers put the issue back on the table by considering legislation that would have reduced the B&O tax on manufacturers — a part of the economy that’s lost jobs over the last two decades — but it failed to pass. This is especially disappointing considering the widespread recognition among lawmakers about the need to boost the economy in rural Washington and the extraordinary growth in state revenue that made the tax relief feasible.”

The legislation Johnson is referring to is HB 2947, a bill that would set up preferential B&O tax rates for manufacturers in counties that either have a population density of less than 100 people per square mile or are smaller than 225 square miles. In other words, the bill would have reduced B&O tax rates for 30 of Washington’s 39 counties over the course of four years.

In her Twitter thread, Representative Frame points out that though Johnson says he is disappointed the B&O tax bill failed to pass, he also testified in opposition to HB 2947 during its public hearing. In her Tweets, Frame calls this the “ultimate bait and switch.”

During the public hearing, Johnson testified that the tax rate decreases should apply to all counties, not just the rural ones outlined in the bill.

“The bill that Rep. Frame refers to would have excluded 9 counties, including some that are largely rural such as Benton and Kitsap,” said Jason Hagey, Vice President of Communications at AWB, in an email.

Representative Frame claims AWB opposed the proposed bill because they would rather support the big businesses on the west side of the state rather than helping rural manufacturers.

Last year, AWB-supported B&O tax relief was included in the budget deal but was ultimately vetoed by Gov. Inslee. Frame says she and 24 of her colleagues urged the governor to veto the tax cut because it would have been permanent and there was no publicly available fiscal analysis. Frame says AWB’s support of last year’s B&O tax relief and their opposition to this year’s HB 2947, shows what their true priorities are. Representative Frame sent us this complete statement over the weekend

“We knew all along their priority was a tax break for manufacturers that export – that was the deal they got in the budget last year,” said Frame in her email. “We called their bluff with Rep. Chapman’s HB 2947/2992, and they opposed it because helping rural Washington was never their actual priority. It was a ruse for helping the big manufacturers in the I-5 corridor. Rural manufacturers could have received tax relief this year, had AWB not opposed HB 2947/2992.”

In response, Hagey says,

“We are a statewide organization representing manufacturers in every part of the state. Last fall, we led a statewide manufacturing bus tour that went to every part of Washington, from the smallest town to downtown Seattle. This was independent of our efforts to promote rural job development. We believe there should be a uniform B&O tax rate for all manufacturers — urban, rural, east, west.”

AWB provided a full response, which you can read in its entirety here.

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