An ad by the Yes on 1107 campaign claimed that new taxes target in-state farmers and food producers while not taxing out-of-state companies selling similar products. According to the Seattle Times, this ad is misleading and creates an unfair perception of what the taxes actually do.
In 1967, lawmakers approved a lower B&O tax rate for meatpackers, who market perishable meats. Somewhere along the line, other companies that use meat in their products — such as canned chili — sought to claim the same lower tax rate, and in 2005 the state Supreme Court ruled that they could, based on the language of the existing law.
The legislature closed this loophole and created a provision to prevent producers of canned and prepared foods that include fruits and vegetables from using the same loophole in the future. What the ad doesn’t say is that non-meat companies have never used this loophole, meaning the tax code didn’t raise taxes on those industries.
Although closing loopholes resulted in higher taxes for some businesses, no new taxes have been imposed on producers in the state. Apparently the campaign saw the light: they pulled the ad from their YouTube page.
However, the campaign website still features two ads that emphasize that I-1107 taxes apply to local food products, with no mention of out-of-state producers.