A group called the Prosperity Partnership comprised of 150 businesses, government, labor and nonprofit groups is putting together a proposal for a Net Economic Activity Tax (NEAT) to replace the current Business & Occupation Tax (B&O) for the 2007 Washington State Legislative Session. The current B&O tax taxes the total value of the product at each step of a product’s lifecycle. The NEAT would only tax the economic activity which occurs in each step. The NEAT should result in the same amount of total tax revenue for the State but will simplify the taxation process by allowing all industries to use the same tax rates. Currently, manufacturing, wholesaling, retailing and services are all taxed at different rates to accommodate the B&O tax system.

Author: Michelle Bomberger, Bellevue Business Lawyer

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