By Associated Press - Friday, January 31, 2020

OLYMPIA, Wash. (AP) - The Washington Senate passed a measure that make changes in a new business and occupation tax surcharge levied on some professional services and technology companies because the tax the Legislature passed last year to generate money for the state’s college grant program needs an overhaul even though it just went into effect.

The Spokesman-Review reported Friday that the bill passed on a 28-21 vote on Thursday. It now heads to the House for consideration.

The tax is to be put into a special account for higher education programs, with the largest beneficiary being the Washington College Grant program. That program guarantees aid to college students at or below the state’s median family income, based on a sliding scale that increases the grant as family income drops.

When the tax passed last year, it was projected to raise about $375 million through mid-2021, but current projections show that won’t be enough to cover the demand for the programs to be covered by the account. The new bill would raise an estimated $500 million.

Under the new measure, fewer professional service businesses will pay the surcharge because it would only apply to companies that have yearly gross income of more than $1 million. But business above that threshold would pay a 1.8% surcharge, rather than the 1.5% in the current law.

The new bill also streamlines the surcharge on what the law calls “advanced computing businesses” that have worldwide gross revenues of more than $25 billion. Current law calls for the surcharge to double if the that revenue is more than $100 billion. The bill has a single rate of 1.22% over the standard B&O tax, and it caps the surcharge at $9 million rather than the current $7 million.

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