Invest your B&O taxes downtown
November 11, 2008 · Updated 2:30 PM
First, a confession. My husband was recently recruited by a large coffee company across the water, and I have relatives addicted to their products. I appreciate the importance chain stores play in the lives of many Americans.
When we were looking for a place to live, though, it was the scarcity of chain stores and the profusion of local, independently owned businesses, that attracted my family to Bainbridge Island. A walk down Winslow Way is a reminder that all downtowns are not the same: stores here look different and sell different things than you find in other places.
Buildings and roofs have odd shapes and there are visual reminders everywhere of the island’s culture and history. Beyond the aesthetics, there is a palpable sense of community also worth celebrating. Owners are connected to the community, and often work in their businesses. They, like the employees they hire, have a relationship with their customers that goes beyond the commercial.
Getting a cookie from the bakery, a book from the bookstore or a pillow from the furniture place commonly becomes a social occasion. We are obsessively modern on this island, fixated on our progress and gadgets, but downtown’s more traditional style prevails. People of all backgrounds bump into each other and say hello, take their kids for ice cream, get a haircut at the barber shop.
The look and feel of downtown does not exist by chance. Much of its recent success has to do with the nonprofit I work for – Bainbridge Island Downtown Association (BIDA). It is responsible for much of the physical appeal of downtown by maintaining gardens, hanging flower baskets, and installing benches, kiosks and holiday decorations. It serves as a resource, and support for local business owners. It also organizes events – such as movies in the park, trick or treat downtown and the holiday open house – that have become central to the island’s identity.
BIDA is funded largely by private contributions, and there are many reasons to support its efforts. Starting a few years ago, though, the state of Washington started a program that makes donations by businesses especially attractive. Under the “Main Street Tax Credit Incentive Program,” passed in 2005, a whopping 75 percent of the business and occupation tax credit is available to businesses that contribute to the BIDA (and other nonprofit downtown associations) to help their revitalization efforts.
A donation of $1,000 to BIDA, in other words, results in a $750 B & O tax credit the following year. Virtually all types of businesses that pay B & O taxes to the state can participate in the program and, since BIDA is a 501(c)(3), part of the contribution may also qualify as a federal tax deduction. Under this program, donating to BIDA is a contribution, a tax credit and a tax deduction.
In the words of local CPA Carrie Williams, a new participant in the program: “I am excited for other businesses to realize the potential of this program for our community. By making a donation to BIDA, I am effectively diverting a portion of my state excise taxes to Bainbridge Island. Writing a check to the state with my tax return will feel much better when I know my business and my family will directly benefit from the funds.”
While enthusiasm for the program is strong among participants, many islanders are unfamiliar with it. The results are unfortunate. The state Department of Revenue has made $100,000 in tax credits available to our community and we are, in effect, turning most of it away.
There are still funds available for 2008: to qualify for a 2009 tax credit, you must register online at the state’s department of revenue Web site and make your donation to BIDA before Dec. 31. (The tax-credit request must be approved prior to making a contribution.)
The process is simple for businesses registered to efile, and directions are on BIDA’s Web site. Better yet, call the office and I’ll tell you more about the details in person; it will give me an excuse to visit one of our local cafes. My husband drinks his employer’s coffee, but I rather like the alternatives.
Kim Hendrickson is the tax incentive program coordinator for the Bainbridge Island Downtown Association.