I send a check to the Washington State Department of Revenue yesterday; it covered the Business and Occupation (B&O) Tax we've been incurring since starting to produce electricity in August. Unlike the income tax charged by the federal government and many other states, the B&O tax is based on revenue rather than profit. The rate varies depending on the type of revenue (the chart above shows the rate for manufacturing; the rate for service businesses is much higher at 1.5%, while some types of food processors pay a rate as low as 0.138%). However, many in the business community hate this tax because it keeps on accruing right through a recession, even when losses are piling up. A great history of Washington State taxes found here shows that we never intended to have this needs-blind tax--it was an emergency measure to raise money during the Great Depression after the state supreme court struck down a voter-approved income tax. Three-quarters of a century later, Washington remains one of a half-dozen states without an income tax (four more votes failed, most recently in 1975). The resulting reliance on property and especially sales taxes earns our state a special distinction: the most unequal tax structure in the nation.
Voters in Oregon just approved a hike in their income tax rates, but preemptive opposition immediately appeared against taking such measures here to fill the $2.6 billion state budget shortfall. So the Legislature will spend the next month struggling through more cuts, and I'll get ready to send another small check in three months--if nothing else, we at Farm Power are doing our part.
