My plan is to propose two changes to our current B&O tax system to further growth, encourage new business and help give new small businesses a BIG start.
#1: Tax brackets for businesses.
Small businesses pay the same rate as large businesses in the same industry. Larger corporations typically have less overhead and better buying power which results in a higher margin. We need to create a fairer system that helps small businesses keep more money while expecting a little more from those who profit more. As minimum wage is set to increase again, we need to make sure we create a buffer so we don’t lose smaller businesses which means less jobs and less revenue for the state.
#2: No Small Business B&O Tax for the First Year
On average it take 3-6 months for a new business to meet expenses and a full year to 18 months to profit. With our gross receipts tax plan, this is a tremendous burden on new small businesses just getting started. I propose a one-year waiver for B&O tax for all new businesses that gross $10M or less the first year with the opportunity to file for a 6-mo extension.
Any temporary loss in revenue will be made up by the entry into the tax revenue stream as a higher grossing business which gives them the break the need to keep the jobs they have created, continue to offer their products and services to the community and have a better chance of producing revenue for the state for years to come.