BP BHEAD INT H

AN ACT Relating to providing a business and occupation tax credit to small and medium-sized business firms that pay benchmark wages or more; adding a new section to chapter 82.04 RCW; creating a new section; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) Small and medium-sized business firms play an essential and increasingly important role in the state's economy;

(2) Many of the state's small and medium-sized business firm owners provide jobs that pay wages providing their employees disposable income that benefits their community;

(3) Other small and medium-sized business owners are discouraged from paying a liveable family wage to their employees in part because the businesses' growth requires them to pay taxes under chapter 82.04 RCW disproportionate to their profit margin; and

(4) The state of Washington, whose largest source of revenue is derived from its sales tax, has a compelling interest in promoting wages that provide higher disposable incomes to employees.

NEW SECTION. Sec. 2. A new section is added to chapter 82.04 RCW to read as follows:

(1) For the purposes of this section:

(a) "Benchmark wage" means a wage that pays an employee at least twelve dollars per hour, two thousand eighty dollars per month, or twenty-four thousand nine hundred sixty dollars per year;

(b) "Business" means either a single taxpayer or consortium of taxpayers subject to taxation under this chapter;

(c) "Employee" means an individual resident of Washington who is employed for at least twenty hours per week by the employer seeking the tax credit and who has been continuously employed for at least sixteen weeks;

(d) "Employer" means an individual or corporate business, who provides a health benefit plan that is at least the equivalent of the Washington basic health plan under chapter 70.47 RCW and pays at least the benchmark wage to each employee, that is subject to the business and occupation tax as determined under this chapter, and that has two hundred fifty or fewer employees;

(e) "Employer benchmark wage costs" means that part of an employer's payroll that is paid directly as the benchmark wage required to be eligible for the credit under this section;

(f) "Medium-sized business firm" means a business entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independently from all other businesses, that has the purpose of making a profit and that has two hundred fifty or fewer employees;

(g) "Small-sized business firm" means a business entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independently from all other businesses, that has the purpose of making a profit and that has fifty or fewer employees; and

(h) "Total wage cost" means only that part of an employer's payroll that is paid directly as wages to employees.

(2) There may be credited against the tax imposed by this chapter, the difference of the value of employer total wage costs less the value of employer benchmark wage costs for incumbent employees, for those small and medium-sized business firms that annually employ less than two hundred fifty employees.

(3) The value of the credit available under this section shall be determined by the allocation of the cost method using generally accepted accounting standards.

(4) Before claiming the credit under this section, the employer must provide to both:

(a) The department, proof of:

(i) Employees earning at least the benchmark wage;

(ii) The employer's total wage cost; and

(iii) The employer's total benchmark wage cost; and

(b) The office of the insurance commissioner, proof of employee health benefit plan coverage, as defined in subsection (1)(d) of this section. The office of the insurance commissioner shall annually report to the department the employers that provide approved health benefit plan coverage for the tax credit available under this section.

(5) This section applies only to an employer's total wage costs above its benchmark wage costs for which an application is approved after June 30, 1996.

(6) This section shall expire June 30, 2001.