SENATE BILL REPORT

SB 5313

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Removes from current law the tax deduction for political donations or contributions.
Directs the Department of Revenue (DOR) to annually estimate the amount of revenue resulting from the removal of the tax deduction.
Requires the Legislature to appropriate the amount identified by the DOR to the Secretary of State to contract with a nonprofit to develop and implement a civics program for middle, secondary, and post-secondary students, and adults; and to the Public Disclosure Commission to improve compliance systems and investigations.

Background: Washington State taxes businesses and occupations using the business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. Revenues are deposited in the state general fund. A business may have more than one B&O tax rate, depending on the types of activities conducted. The tax rates for the major B&O classifications are as follows:

retailing, 0.471 percent;
wholesaling, 0.484 percent;
manufacturing, 0.484 percent; and
service and other activities, 1.5 percent.

Currently law specifies allowable deductions from the Service and Other Activities B&O tax, including political donations and contributions.

Summary of Bill: The B&O tax deduction does not apply to donations or contributions received by a candidate, political committee, caucus political committee, or bona fide political party; or any other person having the expectation of receiving contributions or making expenditures in support of, or opposition to, any candidate or ballot proposition.

The additional revenue from the elimination of the deduction for campaign related donations and contributions is to be appropriated by the Legislature for the following purposes:

to the Secretary of State to contract with a nonprofit organization to develop and implement a civics curricular program for middle, secondary, postsecondary students, and adult groups that promote competent and responsible participation in local and state government; and

to the Public Disclosure Commission to develop and improve compliance systems and investigations.

Staff Summary of Public Testimony: PRO: There is a significant gap, a crevasse, in the knowledge that students have about civic learning because in too many schools social studies programs are gone. This bill provides resources to do teach students and adults about civics.