Washington Research Council: Reducing manufacturing taxes would pave the way to family-wage job creation.

Washington Research Council president and CEO Lew Moore writes in the Seattle Times about the importance of manufacturing to our state and the role tax policy plays. Last week, Gov. Inslee vetoed a reduction in the B&O tax for manufacturers.

Moore writes,

Washington is in a 50-state competition for jobs. Tax rates are one economic factor governments can affect relatively quickly. The level of taxation is a real consideration in business decisions to locate in a state, or to move on. A lowered B&O tax rate for manufacturing would ease the burden on companies that sell out of state (which is most of them). Our manufacturers compete with firms in other states that don’t have to pay a state tax before they even turn a profit or pay their employees, as Washington companies must do with the B&O tax.

He also points out the importance of manufacturing as an element of rural economic development.

A surprising number of the companies that would benefit from the vetoed B&O manufacturing tax policy are small businesses. Many are in depressed rural areas. And it’s important to note that growth in the manufacturing sector can boost the overall economic health of a community. For every manufacturing job created, two to eight additional jobs develop.

He notes an economic consensus on the importance of manufacturing jobs and says,

…lowering taxes on manufacturers would pave the way for jobs that offer workers good pay and the promise of a more secure, family-wage income.

We examined the state’s high business costs in our recently-published foundation report update.

Washington is an expensive place to do business. CNBC ranks Washington No. 30 in its “cost of doing business” ranking. Other indicators point to similar conclusions:

    • The Council on State Taxation shows business taxes in Washington amount to 5.5 percent of private sector gross state product and $7,600 per employee; nationally, the corresponding figures are 4.6 percent and $5,800.

    • Washington has the nation’s the highest worker’s compensation benefit costs
      at $825 per covered worker, followed by California ($776.86), Alaska ($682.06), and Wyoming ($665.56).

    • Washington’s unemployment insurance cost for an average full-time worker is $632, which ranks 6th highest.

As we wrote earlier this week, CNBC has recently rated Washington No. 1 – “the top state in America” – for business. Yet, in that report, Washington falls two spots in “cost of doing business,” from No. 30 to No. 32.

Moore suggests,

With so much concern expressed recently — by the governor and many other state lawmakers — over the obstacles lower-income workers face in accessing greater economic opportunity, a boost for manufacturing is worth a calm reconsideration. We hope it receives one.

We’ll soon know.