Some Democratic lawmakers want Gov. Jay Inslee to veto a major business tax cut for manufacturers passed by the Legislature last week with little notice or analysis.
Some Democratic lawmakers are pressuring Gov. Jay Inslee to veto a major business tax cut for manufacturers passed by the Legislature last week with scant public notice or analysis.
Twenty-three Democratic state representatives signed a public letter to Inslee asking him to veto the tax cut contained in Senate Bill 5977, which would slash the state business and occupation (B&O) tax rate for manufacturers by 40 percent over four years.
The cut would give manufacturers the same rate granted to Boeing and other aerospace companies in 2003 and extended in a record-setting tax-break deal in 2013.
Inslee will announce his decision on the tax cut Friday afternoon.
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Republicans, who demanded the tax cut in last-minute budget negotiations, argued that it was a matter of fairness and could help manufacturers create family-wage jobs in rural areas of the state.
“What is good for Boeing should be good for the little guy as well,” said state Sen. Michael Baumgartner, R-Spokane, during a Friday night debate on the proposal.
The measure would reduce state taxes paid by manufacturers an estimated $64 million over four years. Because the tax cut would be phased in, its value would grow to about $60 million a year by 2022 and $86 million annually by 2027. More than 10,000 firms could benefit.
The Seattle Metropolitan Chamber of Commerce sent an email Wednesday urging members to write to Inslee’s office in support of the tax cut.
Chamber CEO Maud Daudon wrote it would provide “much-needed relief to manufacturing employers, and support ongoing economic prosperity across our entire state.”
But in the letter urging a veto, written by state Rep. Noel Frame, D-Seattle, Democratic legislators objected to the permanent change to tax policy made with little warning and noted that it came even as the Legislature raised property taxes.
“The politics and policy of giving the business community a massive tax cut, while hiking property taxes on middle-class families to fully fund public schools, is unacceptable and dangerous,” the letter said.
Although the tax break was reportedly insisted on by Republicans as part of an eleventh-hour budget deal last week, it was contained in a separate bill from the two-year, $43.7 billion spending measure signed by Inslee to avert a government shutdown.
The manufacturing tax cut was the largest of 13 tax breaks contained in SB 5977, worth nearly $100 million over the next four years. Among the other tax-break beneficiaries were solar projects, some commercial seed and fertilizer sellers, martial-arts studios and film-production companies.
Under his authority as governor, Inslee could veto some of those tax breaks while allowing others to become law.
The bill passed with bipartisan support: 33-16 in the Senate and 88-10 in the House, with some of the yes votes coming from some of the same Democratic lawmakers now urging Inslee to veto the manufacturing-tax portion.