Despite a decade of increasing state revenue, overspending by state officials has left us with a projected $15 billion budget deficit over the next four years. This deficit is not due to a recession, as it was in 2009; it is also not due to declining revenues. It is because spending has eclipsed growing revenues and lawmakers used the rainy-day fund and one-time monies, and assumed more revenue than was forecast to come in. And rather than do the work of balancing the budget, officials have proposed new taxes that would generate between $13 billion and $17 billion dollars for the state – making Washington more expensive for everyone.
Some legislators in support of tax proposals say the taxes will only impact big businesses or the very wealthy, but they are wrong. See if you or your business could be on the hook below.
Businesses + Individuals Impacted by Tax Preference Repeal (proposed by the Senate)
- Directly impacted: Health care service contractors (dental insurers and providers, HMOs)
Who else will end up paying?
- Dental clinics, hospitals and general health care providers
- Employers offering dental benefits
- Patients and families
This change in the tax code could lead to increased costs from insurers, higher insurance costs for businesses and employees, and increased premiums and out-of-pocket costs for health care for patients.
2. Directly impacted: Hospitals owned by municipal corporations or political subdivisions, or affiliated with state institutions
Who else will end up paying?
- Patients
- Medical suppliers and pharmaceutical companies
- Local governments
- Healthcare workers
The loss of certain tax deductions for these institutions could result in higher costs passed down to patients, medical suppliers, and pharmaceutical companies, and local governments may face budgetary strain if hospitals require additional funding. There may also be downward pressure on wages and salaries of health care employees if affected hospitals attempt to recoup costs.
3. Directly impacted: Agricultural packers and processors – Sorting, washing, grading, waxing, packaging, chilling, and controlled atmospheric storage of agricultural products
Who else will end up paying?
- Farmers and growers
- Grocery stores and food retailers
- Restaurants and food service providers
- Food exporters/importers
- Consumers
Higher costs for agricultural packers and processors would likely be passed down to those producing raw agricultural goods (farmers), those who sell processed or packaged goods, like grocers and restaurants, and ultimately the consumer.
4. Directly impacted: Businesses that import or export goods – interstate or international
Who else will end up paying?
- Retailers and wholesalers
- Manufacturers
- Consumers
- Shipping and logistics companies
- Warehousing and distribution centers
Increased costs on imported and exported goods could lead to increased costs from supply chain disruptions for shipping and distributions, and the higher cost of imported goods could be passed down to retailers and wholesalers and ultimately the consumer.
5. Directly impacted: Agricultural shippers – interstate and international
Who else will end up paying?
- Farmers and agricultural producers
- Food processors and packagers
- Grocery stores and food distributors
- Restaurants
- Export markets
- Consumers
Increased transportation costs and higher logistics expenses may lead to lower profit margins for farmers, food processors and packers, leading to higher costs for grocers and restaurants, and ultimately consumers.
6. Directly impacted: Businesses using or providing natural or manufactured gas delivered by other means than through a pipeline
Who else will end up paying?
- Industrial manufacturers
- Commercial businesses (e.g., restaurants, hotels)
- Utility companies
- Consumers
Higher costs of energy needed for production and operation could ultimately lead to higher consumer costs.
7. Directly impacted: Aluminum and silicon smelters
Who else will end up paying?
- Automotive and aerospace industries
- Electronics manufacturers
- Construction and infrastructure projects
- Jobs in metal processing and manufacturing
- Consumers
Increased costs of raw materials for manufacturers could be passed down to consumers who could experience increased costs of manufactured goods like automobiles.
8. Directly impacted: Nonprofit organizations issuing or guaranteeing student loans
Who else will end up paying?
- Students and graduates
- Higher education institutions
- Financial institutions
- Employers
Changes in loan availability could lead to higher costs for students and changes in the student loan market could impact higher educational institutions and have downstream workforce implications.
9. Directly impacted: Freight transportation companies (rail, truck, air, and maritime)
Who else will end up paying?
- Retailers and manufacturers
- Agricultural exporters/importers
- Consumers
- E-commerce businesses
As transportation costs increase, so will logistics expenses, placing pressures on businesses engaged in e-commerce, and higher costs could be passed on to the consumers.
10. Directly impacted: Stevedoring and port terminal service providers – cargo loading/unloading, warehousing, and vessel services.
Who else will end up paying?
- Importers/exporters
- Retailers and wholesalers
- Agricultural exporters
- Manufacturers
- Consumers
The increased costs of moving goods through ports would impact the ports themselves, as well as all implicated in the national and internation supply chain. Again, these costs are likely to be passed on to retailers, wholesalers, and in turn, consumers.
11. Directly impacted: Brokers of international commerce: international steamship agents, customs house brokers, freight forwarders, air cargo agents, customs brokers, and vessel charter brokers
Who else will end up paying?
- Importers/exporters
- Manufacturers relying on global supply chains
- Retailers and wholesalers
- E-commerce businesses
- Consumers
Increased cost of international trade will place pressure on the local supply chain as shipping fees and import and export expenses rise; consumers are likely to see prices rise for imported goods or domestically produced goods that depend upon imported materials.
12. Directly impacted: Travel agents and tour operators
Who else will end up paying?
- Hotels and hospitality businesses
- Tourism-dependent businesses (restaurants, attractions, entertainment venues, transportation services)
- Consumers
- Local economies
Increased costs for travel agents and agencies and tour operators could lead to higher costs for those services, which could put downward pressure on tourism, reducing bookings and visitor spending, which would have implications for many sectors of the local economy.
13. Directly impacted: Nonprofits engaged in research & development
Who else will end up paying?
- Tech startups and biotech firms
- Universities and academic institutions
- Health care and pharmaceutical companies
- Government agencies
- Patients
Increased costs of research and innovation would lead to reductions in research collaborations for universities, slower advancements for healthcare and pharmaceutical companies, and less innovation in health care impacting providers and patients.
14. Directly impacted: International investment managers
Who else will end up paying?
- Investors and financial markets
- Startups and tech firms
- Businesses seeking international expansion
- Retirement funds and pension plans
Changes in securing capital, in international fund flows, and investment returns could have implications for all individuals and businesses with ties to the financial market.
Businesses + Individuals Impacted by Financial Intangibles Tax (Proposed by House and Senate)
- Directly impacted: Large scale investors
Who else will end up paying?
- Financial advisors and wealth managers
- Small and medium-sized businesses
- Potential or existing start-ups seeking venture capital
This may impact the investment ecosystem as large clients of wealth advisors and managers move out of the state and start-ups and small- and medium-sized businesses see a potential decrease in venture capital, private investments, and access to financing.
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Businesses + Individuals Impacted by Employer Payroll Taxes (Proposed by Senate)
- Directly impacted: Any employer with employees working outside of Seattle that has over $7 million in payroll expenses and pays at least one employee $176,100 a year
Who else will end up paying?
- Small businesses in employment centers
- Employees
While employers who meet the threshold requirements will directly pay the tax, employees may see lower salaries or relocation policies, and businesses in employment centers could see less foot traffic if employees move elsewhere.
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Businesses + Individuals Impacted by Property Tax Increase (Proposed by House + Senate)
- Directly impacted: Owners of commercial or residential property, excluding senior citizens and people with disabilities
Who else will end up paying?
- Renters of residential or commercial property
- Consumers
Everyone who owns or rents a home or commercial property within a jurisdiction in Washington who takes advantage of the property tax increase will experience an increased tax burden. Businesses may then pass the cost of the tax increase on to consumers, as will property owners to renters.
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Businesses + Individuals impacted by B&O Surcharge (Proposed by House)
- Directly impacted: Businesses with a taxable income over $250 million
Who will end up paying?
- Small and medium businesses
- Consumers of goods and services sold by impacted businesses
- Real estate and commercial property owners and developers
The proposed B&O tax surcharge is likely to be passed down to small- and medium-sized businesses in the same supply chain and ultimately to consumers and could be less demand for commercial real estate as businesses may gradually relocate to other states.
Have questions about proposed tax impacts? Email Lars Erickson.