Marilyn Strickland (Official Photo)
Although Tacoma's mayoral race has not yet come to a close, the trend is going the way of Marilyn Strickland's victory (for the most current election results see the Pierce County Auditor's page). After today's ballot count, Strickland was up another 10 votes and led Jim Merritt by 1,100 votes. Her confidence in victory is reflected in the agenda - perhaps slightly premature in timing but certainly proactively made - that she hopes to tackle.
Among other things, Strickland said she'll seek to reduce Tacoma's B&O taxes; look to grow the city as a science-technology hub; enhance marketing of the city as an urban college town; and appoint a mayoral task force on education to seek ways to garner more public education dollars and improve student achievement in the classroom."
A point-by-point analysis of this would take up too much space so we'll focus only on the B&O tax in this piece.
Tacoma's Business and Occupation Tax
The B&O tax is a tax on the gross receipts of a business, measured by the value of products, gross proceeds, or gross income (view current B&O tax rates here). Although lowering taxes is a politically pleasant way of lifting the burden on citizens, it is important not to forget the various budget problems we have had over the last year. These problems are spread throughout various sections of city and county government. Just a few days ago the Tacoma-Pierce County Board of Health decided to close the Health Department for 13 days next year in order to help balance the Department's budget (imagine the Pentagon "closing down" for a few days).
Reducing the B&O tax may or not have a substantial effect on the business climate in Tacoma. There are still plenty of other reasons for businesses to want to operate in the city. Here are 10 straight from the city, but don't just take the city's word for it. Thinking about it for just a few moments, it is easy to see the reasons why Tacoma is economically an appealing place.
First and foremost is the port. International trade plays a crucial role in area's economy, particularly in trade with Asia. Tacoma is also relatively cheaper than Seattle which has attracted a number of young professionals over the past few years. An influx of labor and talent has led to a surge of new firms to capitalize on this growing resource pool. Then there is the military. Altogether the Fort Lewis Army Base, Madigan Army Medical Center, and McChord Air Force Base employ over 35,000 people (see page 8 of the link).
There is a great deal of data indicating Tacoma's impressive growth in recent years. A study by the Milken Institute of American's best performing cities in 2008 showed that Tacoma moved up to 8th place from 50th the year before. Another overall ranking for 2008 put Tacoma at 14th out of 335 cities. What is noticable in both of these rankings is that not only is Tacoma very high up the list in overall terms, but it is also ahead of all of its neighboring cities, including its big brother Seattle. A comparison of job growth between Tacoma and the US as a whole from 2001-2007 is striking:
While the impact on Tacoma's business environment is uncertain, lowering the B&O tax would definitely reduce the city's revenue source. Of course, even if the government decides to lower this tax, they might just as easily raise another one to make up the difference. In any case this misses something important. One of the driving factors of Tacoma's economic growth has been the combination of both private sector business and the city government's capacity to raise revenue through taxes for public works. Upsetting that balance too much could drastically hinder our ability to work our way out of this recession.
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