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For Friday: Stimulus package, state budget

Post by Kim Bradford on Feb. 12, 2009 at 2:36 pm with 1 Comment »
February 12, 2009 2:36 pm

It’s not a good sign that as the $789 federal stimulus package heads for fast-tracked approval, most major news organizations – and probably most members of Congress – are still trying to figure out what’s in it.

The state Legislature, which has yet to pass a single spending cut, is either in denial about the size of the budget problem or hoping that the situation gets so dire that new taxes are an easier sell.

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  1. jvaughn50 says:

    I would like to take a moment to introduce myself. My name is Jim Vaughn and I am a former military officer that now has a staffing service focused on assisting our veterans obtain employment. Priority going to service members returning from Iraq and Afghanistan. Given the state of our country and economy I decided to become politically active and created an organization called Citizens for Economic Stimulus in Washington.

    We have filed an initiative that we believe will help the economy and the residents of Washington.

    We need your support in order to:
    Obtaining 325,000 signatures.
    Financing these initiatives. Please assist us by Forwarding this e-mail or send the information to the members of your organization.
    At a minimum would we ask that you consider endorsing either or both of these initiatives?

    This initiative replaces the B&O Tax with a flat rate corporate tax not to exceed 5% (national average is 6.6%). My B&O Tax for last quarter was .015% and at a flat rate was 6.9%

    Website is

    Key points for implementing this initiative are as follows:

    State officials also have to be cognizant of the fact that they are not only competing against each other for investment and jobs, but against the rest of the world. The emerging low-tax countries in Europe and Asia benefit from the United States remaining a high-tax country. In the past two months, at least six countries have announced plans to cut their corporate tax rates: Canada, Hong Kong, Korea, South Africa, Spain, and Taiwan. In an interview in the Korea Times, Choi Kyung-hwan, a member of the new administration’s presidential transition committee, said: “The corporate income tax reduction is not a matter of choice, but a matter of life and death for Korea in an increasingly globalized business environment.”

    Governor Looking for Ideas to Reform B&O Tax – You Can Help Written on Monday, July 25, 2005
    During a meeting with the Clark County High-Tech Council last Thursday, Gov. Gregoire said she is looking for ways to reform the B&O tax to make it less onerous on business. AWB President Don Brunell attended that meeting, and she asked him to develop ideas on the tax. She indicated that she is not looking to replace it with an income tax. AWB’s Tom McBride and the Tax and Fiscal Policy Council (TFPC) will work on the issue. Send your ideas to Tom at

    Gregoire: Combine small schools, overhaul biz tax- Feb 11, 2009
    Gov. Chris Gregoire pushed for more overhauls of state government today, asking business leaders for a plan to reform Washington’s main business tax and calling for consolidation of small public schools. It was Gregoire’s second public push this week for considerable government reform as the state grapples with a budget deficit that will likely top $6 billion through 2011.
    FOUR YEARS LATER and she wants another study. By doing this the citizens, she knows the citizens are divided on how to be taxed and nothing happens. What I see is all talk and no action.

    We cannot wait any longer. The Washington State Research Counsel states, that: “No sensible case can be made for imposing gross receipts taxes in the modern economic environment. The old turnover taxes, typically adopted as desperate measures in fiscal crisis, were replaced with taxes that created fewer economic problems. Gross receipts taxes should never be seen as an element of positive tax reform. They were abandoned for good reason. One reason for the high tax burden placed on business in Washington is the business and occupation tax. This is a truly unique aspect of the Washington tax system and is the most significant gross receipts tax remaining in the nation.”

    The major concerns regarding the business and occupation tax, otherwise known as a gross receipts tax, are that the business and occupation tax is:
    A tax on all gross revenues incurred by a business, not just the profits;
    A stealth tax which is hidden from the consumer; and
    A tax on a business whether they make a profit or not.
    RCW 19.275.030 states that no person may establish, promote, operate, or participate in any pyramid scheme and yet our business and occupation tax is a pyramid tax. The business and occupation tax is imposed on each stage of the service or product and creates a pyramid effect which is in turn passed on to the consumer.
    There are only four states that have a gross receipts tax. Below is a comparison of the states that have a gross receipts tax:
    (a) Delaware: Retail can deduct eighty thousand dollars per month. Manufacturers can deduct one million dollars per month.
    (b) Kentucky: Business can choose between gross receipts and gross profits. Business under three million dollars is exempt.
    (c) Ohio: Business under one hundred fifty thousand dollars is exempt and those businesses with receipts between one hundred fifty thousand dollars and one million dollars pay one hundred fifty dollars.
    (d) Washington: The worst tax of all four gross receipts tax states. Business under twenty-eight thousand dollars is exempt.

    The United States is among eight countries with extra corporate tax rates imposed by state or local levels of government. While the burden of these state level taxes is somewhat lessened because they can be deducted from federal taxes, they do add a second layer of tax and also add considerable complexity for multistate and multinational businesses. Unfortunately, in the state of Washington the business and occupation tax on gross receipts does not allow for a deduction for moneys paid for federal or local taxes.

    In order for the state of Washington to economically compete in the global market, we need to revive manufacturing and business. In order to do this we must eliminate the business and occupation tax, which discourages capital investment by our businesses and discourages purchases of capital equipment that are directly related to growth. This is not a good strategy for economic growth and development.

    Join Citizens for Economic Stimulus in WA: for contributions, please make checks payable to:

    Citizens for Economic Stimulus in WA
    14416 168th Street, Orting, WA 98360
    If you have any questions, please feel free to call us at 253.241.9634

    Jim Vaughn

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