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City of Seattle

New B&O Tax Deduction for Life Science Research

In my State of the City speech in February I promised to work with the life science community to eliminate a tax on their research. The City of Seattle collects a business and occupation tax on research grants from the National Institutes of Health or any federal funds received in support of medical research that many of our important life science community members are conducting. An NIH grant is not revenue, it is specified research funding that fuels the innovation that will create new products and new jobs. And nowhere in the grant award from the federal government is there a line item for paying taxes. That tax didn’t make sense.

Working with the life science community, I proposed an ordinance to allow a business and occupation tax deduction for nonprofit life science community federal fund recipients and subrecipients. The Council expanded the scope to also include private sector researchers. I thank the Seattle City Council for unanimously approving the tax deduction yesterday. I’m looking forward to signing it.

This is the first, and important, step in a broad effort to review our tax code. We have had many conversations with our business community about the local Business and Occupation tax over the last several months. Seattle and other large cities that collect B&O tax have been working hard to ensure we preserve this tax at the local level to ensure sustained financial support for important services to our community — things such as libraries, parks, police and fire. One way we’ll keep this dialogue going is by establishing a Tax Advisory Committee. We’re working now to determine what this will look like and plan to move forward with the member selection process soon. I’ll keep you posted as this unfolds.

Meanwhile, another effort under way is developing a one-stop shop for payment of business licenses and taxes to multiple municipalities. The City of Seattle is working with other Washington state cities to develop a Joint City Business License and Tax Portal. The cities have selected a vendor to help develop detailed business and technical requirements for the portal. This work will be done between May and September of this year. The goal of the Joint City License and Tax portal project is to issue a request for proposal for a system and a system implementer in October of this year with the portal implementation starting in January of 2013. One important step of developing this portal will be reviewing our work with businesses to ensure the portal meets the needs of those who register for a business license and file business and occupation taxes.

Posted by: Mayor Mike McGinn


Comment from Ronald Ein
Time May 3, 2012 at 3:03 pm

Please, stop giving away our revenue streams to organizations and companies that are already here and operating. We have too many unmet needs for public services to permit this sort of taxpayer “philanthropy.” How is such a break any different than sports teams’ extortion of public entities?

Comment from billyjranaya
Time May 3, 2012 at 3:54 pm

on matthew 24:22
for the (elects sake or elites sake) will be shortend. it means god would have to step in to distroy the wicked evil that targeted the elect (elite) or they would not live though the plans of the church of satan. watch the age of decite and hollywoods satainc agenda .like all ways have a nice day.p.s. the elite thought it read that their days would be shorten like theymade god mad and he would distroy he told me cause all the praying from the family,loyal employees,and the elite,he recived he opened my understanding of matt:24;22 ok please tell all the power full elite of the world.and god asked the remain calm and allways do what is right not whats wrong least they lose their place in heaven for sin.
thank you

Comment from Erik Nilsson
Time May 3, 2012 at 3:59 pm

This ordinance is good policy.

UW is the largest single federal grant recipient in Seattle by far, and UW is already exempt from this tax by state law. So for nonprofits, this was essentially a tax on not being UW.

As for companies, the total amount of tax involved is small: the city collects more each day from parking meters than this tax would have collected per year from all affected companies. The companies involved are small, and usually too early to be profitable. Enforcing this tax would give such companies an incentive to move outside the city. When these companies grow bigger, they aren’t likely to move back to Seattle.