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The Impact of Policy on Small Business

In the day to day, it’s easy to lose track of how policy shapes our lives, from the streets we drive on, to the homes we live in, to the stores we shop in. Did you take transit to work today? Policies decided the price of your bus ride. Going on a hike this weekend? Policies help protect your favorite trails. Or maybe you’re itching to try that new restaurant in your neighborhood? Policy plays a big role in whether that restaurant thrives or closes up shop in a few months. Here, let me explain.

Take taxes, for example. We all pay them, one way or another. They pay for our roads, schools, healthcare— all sorts of things. In Washington, we pay sales and property taxes, but no income tax. It’s well-documented how tax structures like Washington’s put an unfair burden on lower income individuals and families. But how do businesses fare in our local tax climate? Let’s find out.

Businesses in Washington pay their fair share through the Business & Occupation (B&O) Tax. Depending on what city you operate in, you may also pay a city B&O tax on top of the state tax— a huge burden for a new or small business. If you’re a business owner, you probably know all about the infamous B&O tax. How much a business pays depends on how much they earn and what type of business they are. All businesses pay this tax on their gross receipts—meaning there’s no deductions allowed for business costs like labor, supplies, or insurance. If this sounds familiar, you’re right. In the same way the individual tax structure overburdens lower income individuals, the B&O tax overburdens small businesses, who have much tighter margins than big corporations.

But wait, there’s good news! Some of our legislators in Olympia are working to make B&O taxes more small business-friendly. In a bill proposed to the Washington State Legislature last year, small businesses could take into account operational costs in calculating their B&O tax obligations. That means that businesses with a margin less than $250,000/year would be totally exempt from the B&O tax under the proposed changes. Although the bill didn’t make it through the legislature in the 2018 session, there’s still hope. That’s where you come in!

Whether you’re a small business owner or an ally of small business, you can have a voice in the policies that affect small businesses in our state. This year’s legislative session begins on January 14th. Contact your state legislator to talk about how policies like the B&O tax affect you, your loved ones, and your business.

And there’s even more good news! Seattle Mayor Jenny Durkan recently signed an Executive Order in support of small businesses in the city. One big agenda item in the Executive Order is a study into how to lessen the burden of the city B&O tax and other fees on small businesses. Want to weigh in? You can contact the City Budget Office, or reach out to Business Impact NW staff to share your thoughts!

Remember, it’s easy to get caught up in the hustle and bustle of daily life, and lose sight of how policy affects us. But without our voices, policies can be rigid, impractical, and even unjust. There’s a lot of ways to stay involved in policy conversations, but here’s a few takeaways to keep in mind:

  • Vote! Voting is one of the best ways to let policy makers know what’s important to you and your business. Not registered yet? Register here before our next election!
  • Contact your legislator! Legislators love to hear from their constituents – whether to encourage them to vote for a bill, or just to bring attention to an issue that affects you. Find your state and national legislators here. Looking more local? Search for your local city and county council members and reach out to introduce yourself!
  • Connect with Business Impact NW staff! Business Impact NW is always looking for ways to better support our stakeholders. Do you have an experience to share about how policy has affected you? We’d love to hear about it and see how we can help!

About the author

Kimberly Manson

Kimberly Manson is Business Impact NW's Policy Aide Practicum Student and a candidate in the University of Washington's Master of Social Work Program. Kimberly also currently works as a Social Worker with immigrant foster youth. Kimberly grew up in the greater Seattle area, and is passionate about promoting equity and justice in her local community.

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