Latest Tax Hike Proposal Hits Architects Harder

The new “Go Home” tax proposal in Olympia will hit architects squarely on the chin. It proposes a 20% Business & Occupations Tax hike on service businesses on architects. This tax hike would cost architecture and engineering firms over $23 million the first year and roughly $70 million over its three year term.

WA Lost 2,400 A&E Jobs This Year

Washington lost 2,400 A&E jobs in just January and February this year.  Since July 2008, Washington has lost 7,000 A&E jobs. Here is a graph from the Federal Bureau of Labor Statistics on the jobs situation for our industry.

Architects Cannot Afford a 20% Tax Hike

Architects already pay the highest B&O tax rate of 1.5% of gross receipts. The latest compromise increases the rate to 1.8% for over three years.

We agree with Governor Gregoire when she says that higher costs on the construction industry will prolong the recession. This tax increase will hamper architecture, and thus construction, from helping Washington State out of the current economic recession.

The state is relying upon construction. Construction relies upon architects. Put simply, if a project is not designed it cannot be constructed.

Every dollar spent on design supports $10 to $15 in construction. Every $10 million dollars spent on building construction typically requires 160,000 labor hours and creates 285 full-time, family wage jobs.

Don’t Raise Taxes on Businesses that are Barely Surviving

A&E firms in our state are coping with the current recession by closing offices, cutting staff, lowering benefits and reducing wages.

The direct impact of the current recession cannot be told just by the employment figures for. Many laid off architects are working from home trying to get design projects or performing consulting work. And, firms are reducing hours and using furloughs to keep staff employed but at reduced salaries. Their income is just a fraction of their previous job, but they are not technically “unemployed.” So, they don’t show up in the government reports

Since the B&O tax is levied on gross receipts, any additional tax burden will come directly out of staff, salaries and benefits. This tax is also being levied on contracts that have already been signed, but for which the work is ongoing.

The Double Whammy of Budgets and Taxes

This tax increase is a double-whammy on architects who are being hurt by other state decisions. In the proposed budget, the state is transferring almost $1 billion out of the capital budget to the operating budget. As a result, state funding for design projects has been cut dramatically.

At a time when the private sector cannot get credit for major construction, the state had curtailed its spending because of these budget transfers.

Thus, the state has cost architects their jobs through both its spending and taxing decisions.