The Brief
-
Washington state’s new taxes, effective October 1, aim to raise $9 billion over four years, impacting around 90,000 businesses, especially small ones.
-
Joshua Dirks, owner of a Seattle digital agency, discusses on a podcast how these taxes are forcing him to close his business due to increased costs and competitive disadvantages.
-
The new tax measures have sparked concerns about the future of small businesses in Washington, with potential implications for the state’s economic landscape and business environment.
SEATTLE – A controversial slew of taxes went into effect on Oct. 1 in Washington state, which aim to generate about $9 billion over four years. The taxes impact about 90,000 businesses.
On the ninth episode of the “Seattle News Weekly” podcast, FOX 13 Seattle anchor Hana Kim talks about a suite of controversial new taxes that took effect this month, pushed by the state’s Democratic-majority Legislature. Joining Hana to discuss the effect of these recent taxes is Joshua Dirks, team lead of Seattle-based advertising company Project Bionic.
The controversy centers on the expansion of the retail sales tax to cover various services, including digital advertising. This tax is now applied to services such as information technology, custom website development, investigation/security services, live presentations and custom software.
Dirks runs a digital agency that he says has become prohibitively expensive to run in the state of Washington. Closing his business is a hard fact to face, according to Dirks.
“I mean, long and short of it is, we’re shutting down the agency that I’ve owned for 16 years and started here in Seattle… adding this on top of what we already have to pay for is killing the margins of the business and what makes a profitable agency at the end of the day.” Joshua Dirks
On the podcast, Dirks notes that the bill includes an exemption for traditional advertising, such as print ads in newspapers and billboards, but not for digital advertising, which he says creates an uneven playing field. This has caused clients to look out of state, resulting in Dirks losing a 16-year account to a Los Angeles agency.
“And so it just feels like a really uneven playing field. Even our peers in Portland now have a leg up on us when we look at regional and statewide RFPs because the cost is just going up on everything…” Joshua Dirks
They discussed the size of his business, which was made up of 16 employees. They go into the concept that, even though his business is small, it still uses an extensive list of software and digital automated services.
Dirks says the taxes are going to create a big knowledge gap in the marketplace because businesses may no longer be able to pay for educational resources and events that revolve around understanding new topics in the industry, like the emergence of AI and the digital sphere overall.
Dirks also discusses the increase in the Business and Occupation (B&O) tax. The B&O tax for businesses grossing $5 million or more is set to increase from 1.75% to 2.1%. Dirks clarifies that $5 million in gross revenue is mostly overhead, not profit, for most businesses. Businesses are being “double impacted” by both the new sales tax and a 20% B&O tax increase on services, according to Dirks.
They discuss the divide in how people believe tax money should be spent in Washington and Dirks encourages voters to research their government officials and where they stand on tax packages like the one enacted on Oct. 1.
“But Washington state has a proclivity to continue to add programs that don’t have high impact, that don’t create the change… And so I advocate to Washington voters, start reading what these people’s backgrounds are… because most of these candidates have always been at the trough and have never had to make cuts or really look at impact.” Joshua Dirks
Dirks brings up that a large business, Comcast, is suing over the tax, but Dirks is critical of state leaders for pushing the tax through in eight days without consulting the industry or small businesses. He advocates for lawmakers to visit small and medium-sized businesses and learn about their operational pain points.
The podcast concludes with a discussion about large businesses and that businesses will continue to move away from states that are increasing taxes like these. Dirks says people should come together to find a solution to these problems with businesses rather than increasing tax.
The podcast wraps up after Dirks says he anticipates other creative businesses are considering moving out of the state. He states he will eventually move out of the area and no longer incorporate his future businesses in Washington, choosing to be “geoflexible.” He warns that the mass exodus of talent could “meteorically change the face of what Seattle looks like.”
Join us every Thursday to stay up to date on weekly news around the area.
Seattle News Weekly is a podcast that goes in depth and gives context to the stories that matter to the western Washington community. Check back every Thursday for a new episode on your favorite podcast platform, including Spotify, Apple Podcasts, Pandora, Stitcher, Amazon Music, TuneIn and Audible, or YouTube.
The Source
Information in this story came from original FOX 13 Seattle reporting.
MORE NEWS FROM FOX SEATTLE
Black Lives Matter mural vandalized in Seattle’s Capitol Hill neighborhood
Nearly 1,000 Starbucks workers in Seattle, Kent to be laid off
First WA snow of the season to hit this week. Here’s where
How to watch UW Huskies football vs. Rutgers game live
Suspected DUI driver crashes into Pierce County deputy, arrested
To get the best local news, weather and sports in Seattle for free, sign up for the daily FOX Seattle newsletter.
Download the free FOX LOCAL app for mobile in the Apple App Store or Google Play Store for live Seattle news, top stories, weather updates and more local and national news.
