Jake: Why Gov. Ferguson’s B&O claim is meaningless for small business owners

One of my favorite parts of “The Jake and Spike Show” is “Last Call,” the final segment of the day, where we cherry-pick listener texts and respond on air.

Earlier in the show, we’d talked about the dangers of the $100,000 charitable donation cap in the millionaires tax, and why I hope everyone votes YES on I-645 to repeal it. Then we got a message from a regular, Doc in Shoreline. Even when listeners disagree with me, I sincerely appreciate the pushback and the thoughtful discussion it starts.

Doc wrote: “Why doesn’t Jake want to lower the B&O tax for small businesses, which would lower the rates they charge us, customers? The millionaires tax would lower the B&O tax by raising the filing threshold and providing substantial tax credits. Starting in 2029, small businesses grossing less than $300,000 will be exempt, marking the largest tax cut for small businesses in Washington state history.”

Great question, Doc. It’s also exactly what Governor Bob Ferguson has been telling anyone who’ll listen. But as with everything, the devil is in the details.

Start with that claim: ‘the largest tax cut for small businesses in state history’

Maybe it helps the most businesses, but the claim is more impressive than the benefit.

What a business saves depends on what it does. Retail is taxed at 0.471% on the low end. Service businesses pay 1.5% on the high end. Run the numbers on a business grossing just under the $300,000 cutoff, and you’re looking at roughly $1,413 in savings at the low end and $4,500 at the high end. And that’s the best case. Smaller businesses save less.

I’m not knocking a tax cut. Keep ’em coming. But it only counts if the millionaires tax stays a millionaires tax.

It won’t.

Governor Ferguson signed a law that legislators can change with a simple majority vote. And they’ve said, in press interviews, that lowering the threshold is the intention.

So if you own a small business, here’s your choice: a small break on your B&O tax, or a 9.9% tax on your take-home pay when lawmakers deliver on their intentions to drop the threshold below a million dollars.

Don’t take my word for it

I reached out to a friend who owns a restaurant in Seattle. She asked me to keep her anonymous, but said I could share this:

“As a business owner, I don’t want the millionaire tax. I’d rather pay my B&O tax because I’m thinking about my kids. I have two Gen Z kids who’ve done everything right. They got a great degree, and they still can’t afford to live comfortably. The millionaire tax is going to be horrible for Washington because of all the loose ends. As parents, we need to fight for the next generation.

“I’m not against taxes. Excessive taxes are the problem,” she continued. “I understand taxes help make our country beautiful and provide essential services, but I need to see something in return. We deserve to see our money put to good use!”

She’s right, and I think she speaks for thousands of small business owners. Letting you keep a little more today so they can take a lot more tomorrow is a bad deal.

When you vote YES on I-645, think of them.

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