There is much discussion about the damage U.S. taxation policies cause to corporations. I hear little discussion on how paying those taxes is part of good stewardship as a business. Now that you have paid your corporate taxes, it is a good time to evaluate how your tax decisions play a role in being a responsible business within your community.
Let’s set aside discussions about whether corporate taxes are excessive in the US, or whether Washington B&O taxes are unfair because they tax a business whether it’s profitable or not. Let’s look at what your company is doing for the place to which your business contributes.
The Census Bureau reported in its last 2007 census that Washington has one of the higher ratios of state taxes compared with other states; however, this is balanced by supporting more programs. Public K-12 and vocational schools, community colleges, health and public assistance programs, and cutting-edge criminal justice programs remain key commitments for this state.
Consider this. In 2009, the B&O tax contributed about 12% to the general fund, and 8.5% to total state revenue.1, 2 When sales tax income and B&O dropped in that year by 7.82%, the state was forced to cut back on the programs it supported.
What was happening for businesses at the same time? A report from a Washington Technology Industry Association survey tells us 38% of the respondents said the economy had delayed, reduced or put their efforts to raise capital on hold. Another 56% reported they had lower hiring outlooks, and 66% said they weren’t going to invest in growth or expansion. Businesses were hurting along with their communities.
At the same time, Federal deficits exploded. What we could expect from our tax dollars shrunk. Yet, our state continued to receive Federal funding for many vital programs—healthcare, highways and education especially.
Where does the money come from to support these essential needs within our communities? A combination of the income and sales taxes you and your employees pay, and your company’s B&O and corporate taxes. Thus, whether you agree with the distribution of revenues collected by the state and Federal government, you are supporting your community when you pay taxes.
Does considering taxes in this light adjust your attitude? Consider it positive that the better your business is doing, the more your community benefits.