Land Value Taxation, often called LVT, is an alternative way to generate public revenue. Instead of heavily taxing buildings, it focuses on land value, especially in high-demand areas. Supporters say this method can encourage the development of homes and businesses, reduce empty lots, and help communities fund local services. Critics warn it might shift costs onto landowners without additional income, and that implementing it fairly can be challenging. In this two-part series, Part 1 explains what LVT is and how it could affect businesses and neighborhoods. Part 2 examines the potential benefits and drawbacks for Washington residents and businesses, along with relevant history and legal limits affecting Washington State.

Land Value Taxation (LVT) is a method of taxing land based on its value, while applying lower or no taxes on buildings and other improvements. The main idea is that land's worth mainly comes from community assets like roads, schools, nearby jobs, public safety, and parks. LVT aims to share this collective value to support public services without punishing property owners for improving their structures.

This method differs from the typical property tax, which generally taxes land and improvements as real property. In a standard system, a business that expands its store, adds housing above shops, or renovates a warehouse might face a higher tax bill because the property's value increases. LVT seeks to minimize this “penalty” on building and reinvestment by emphasizing the land’s location value.

For businesses, the main practical change is how the tax system influences their behavior. If a business owns valuable land but uses it sparingly, such as a low-rise building with a large parking lot in a busy district, LVT could increase their tax bill more than they currently expect. On the other hand, if a business develops more intensively or redevelops a vacant parcel, LVT can make that investment easier to justify because the tax rise from new construction would be less than under a system that heavily taxes buildings.

For local communities, LVT is often viewed as a way to curb land speculation. When someone owns a vacant or underused lot in a high-demand area, expecting prices to increase, they still pay taxes based on land value. This can encourage earlier development, leading to more housing, additional commercial spaces, and greater activity in business districts. Some studies of “split-rate” systems in the United States, where land is taxed at a higher rate than buildings, have shown signs of increased building activity in certain areas, although results vary depending on local design and market conditions.
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LVT is best viewed as a change in incentives. It focuses on taxing land value more and building value less, encouraging development and reinvestment in areas where land is scarce and expensive. Although this seems simple, the actual effects depend on who bears more of the tax burden, who bears less, and how quickly any new system is implemented. In Part 2, we will examine the likely winners and losers among Washington businesses and residents, as well as a key factor in Washington: the state’s legal rules around property tax uniformity and what that means for whether LVT can be successfully implemented here.

​Sources

• Local Housing Solutions, “Land Value Taxation” overview.
• Lincoln Institute of Land Policy, foundational explanations and policy reports on land value taxation.
• Oates & Schwab (1997), research on impacts of split-rate taxation (Pittsburgh).

This article was written with contributions from AI to organize the information and improve its readability.

Thanks to everyone who joined us for our Yes, You Can! session with Maria on June 3rd! 

Education and workforce development are crucial because local businesses need skilled workers to grow. When employers find workers with proper training, they can better serve customers, expand their operations, and create more jobs. A strong workforce also brings new businesses to the Tri-Cities. Companies are more likely to invest in a region when they know there are qualified workers available.

This principle is also crucial for the local community. Investing in education, vocational training, and skill development gives students and workers more chances for success. Not every career needs a four-year degree, and trade and technical programs can lead to stable, well-paying jobs. When people can build careers close to home, families are stronger, and the regional economy becomes more resilient.

The Chamber advocates for strong partnerships between businesses and educators because these relationships help align training with actual workforce needs. Employers can identify which technical and soft skills are most crucial, while schools and training providers can modify programs to prepare students for those roles. This kind of collaboration fosters practical, cost-effective learning opportunities and connects classroom instruction with real-world experience.

The Chamber also applies this guiding principle when evaluating public policy. It looks for policies that strengthen workforce pipelines, support vocational and technical education, promote partnerships between businesses and schools, and help attract and retain talent in the region. If a proposal improves access to valuable training and prepares people for local jobs, it is more likely to align with this principle. Conversely, if it creates barriers, ignores employer needs, or reduces workforce readiness, the Chamber may raise concerns.
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Ultimately, education and workforce development extend beyond just school issues. They affect the economy and influence every business and household in the Tri-Cities. By supporting policies that prepare people for work and connect education to local industries, the Chamber helps promote long-term prosperity for the entire region.

Thank you to everyone who presented or attended the Washington Workplace Summit in May 27!

This article continues the series on what could happen if Washington replaced the B&O tax with a margin tax. While some businesses might welcome a tax that more accurately reflects operating costs, the bigger policy challenge is that a margin tax is typically more complex. That means the debate isn’t just about whether the idea sounds better, but also whether the new system would be simple, predictable, and workable for businesses across different industries.


One major concern is compliance. A margin tax usually requires more calculations than the B&O tax because businesses must decide which costs to include, choose the correct deduction method, and determine how to measure their taxable margin. This can lead to more paperwork, increased reliance on accountants, and greater uncertainty for small businesses that lack dedicated tax staff.


Another issue is that tax design can lead to uneven results. A margin tax might favor one industry over another. Businesses with many deductible expenses may benefit, while companies with fewer qualifying costs might see little change. That’s why replacing B&O wouldn’t offer a simple solution for the entire business community.
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The main point is that a margin tax could benefit some Washington businesses, but only if it is carefully planned. For employers, the key lesson is that the details matter more than the name of the tax. A well-designed replacement could reduce the burden on certain companies, but a poorly planned one might just shift concerns from one group of businesses to another. If you like, I can also turn these four shorter articles into a single blog series with consistent titles, subtitles, and closing summaries.

Sources

• Washington State Department of Revenue. “Business & Occupation Tax.”
  Explains Washington’s B&O tax structure, including the fact that it applies to gross receipts rather than net income.
• Washington State Department of Revenue. “Business & Occupation Tax Classifications.”
  Provides the main business classifications used under Washington’s B&O tax system and helps show how tax treatment can vary by activity.
• Washington State Department of Revenue. “Business and Occupation Tax Classification Definitions.”
  Offers additional detail on how Washington defines business activities for B&O tax reporting purposes.
• Texas Comptroller of Public Accounts. “Franchise Tax.”
  Provides the main overview page for Texas franchise tax, which is often used as a practical example of a margin-based business tax.
• Texas Comptroller of Public Accounts. “Franchise Tax Overview.”
  Explains how Texas taxable margin is calculated and outlines the main reporting framework for the tax.
• Texas Comptroller of Public Accounts. “Texas Franchise Tax Report Forms for 2026.”
  Includes current threshold information and filing details that help illustrate how smaller firms may be treated under the Texas system. 

This article was written with contributions from AI to organize the information and improve its readability.

This article is part of a short series comparing a margin tax to Washington’s B&O tax. The main question is simple: if Washington replaced the B&O tax with a margin tax, which businesses would benefit most? Usually, the answer is businesses that generate a lot of revenue but keep a small profit margin after covering their main expenses.


Under the current B&O tax, businesses pay tax on gross receipts rather than on what remains after costs. This means a company can owe taxes even when profit is limited. For businesses with high payroll, inventory, materials, or other major operating costs, that can feel especially burdensome. A margin tax might lessen that burden because it generally taxes a smaller base than total gross receipts.


That could be especially important for retailers, manufacturers, wholesalers, contractors, and certain agricultural businesses. These types of firms often handle large sums of money, but their actual profit margins might be slim. A tax system that considers some costs before calculating the tax could seem more realistic and fairer to these businesses.
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Still, not every business will benefit equally. Some service-based firms might see less improvement depending on how the tax is structured and which costs are allowed. The main point is that replacing B&O is likely to shift the tax burden rather than eliminate it. In the next article, I will explore the other side of that shift: the complexity, design choices, and policy tradeoffs involved in replacing the B&O tax.

This article is the second part of a short series explaining the basics of a margin tax and how it compares to Washington’s B&O tax. Although a margin tax might seem more fair because it considers some business costs, it doesn't mean it is simple. In fact, one major concern is that it could make the tax system more complicated for employers.

Washington’s B&O tax is often criticized, but its basic structure remains straightforward. It taxes gross receipts based on the business classification. A margin tax typically involves more calculations because the business must identify eligible costs, select the deduction method, and determine its taxable margin. This often results in increased recordkeeping, additional accounting support, and more time spent on compliance.

This is especially important for small businesses. A small firm might benefit from a lower tax burden if its margins are thin, but it could also face a more complicated filing process. For some owners, the extra paperwork and complexity might outweigh the tax savings. In other words, a margin tax might fix one problem but create another.
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The main lesson for Washington businesses is that how a tax is structured matters more than what it's called. A margin tax could benefit some companies, especially those currently taxed heavily on gross receipts, but it wouldn't benefit all businesses equally. The next article in this series will examine the larger policy question: what happens if Washington actually eliminates the B&O tax and replaces it with a margin tax.

This article is the first in a short series comparing a margin tax with Washington’s Business & Occupation (B&O) tax. The goal is to help business owners understand the basic concept before exploring the tradeoffs. Generally, a margin tax differs from the B&O tax because it taxes a business after certain cost deductions are allowed, while the B&O tax is based on gross receipts.

That difference matters because Washington’s B&O tax can be applied even when a business has very little profit left. A company might seem to have strong sales on paper, but after paying wages, rent, materials, fuel, and other operating costs, the actual profit could be much lower. A margin tax is often discussed as an alternative because it aims to better reflect a business’s actual financial situation instead of taxing all revenue.

For some businesses, that can be quite advantageous. Companies with high revenue but narrow profit margins—such as retailers, manufacturers, wholesalers, contractors, and certain agricultural businesses—might find a margin tax more sensible than a gross receipts tax. Small businesses in these sectors often face pressure when taxes are based on sales rather than on what they actually keep.
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In simple terms, supporters of a margin tax often argue that it more accurately reflects the true cost of doing business. This doesn't mean it is always better, but it explains why the idea often comes up in tax policy discussions. In the next article in this series, I will explore the other side of the debate: how a margin tax can also create new problems, especially regarding complexity, compliance, and varying impacts across industries.

Thanks to everyone that made it out to a great ribbon cutting at The Towns on Elm! You can check them out at 212 N. Elm St., Kennewick, WA 99336