When small business owners and workers talk, state policymakers should listen. The reason is crystal clear – small business is the backbone of the American economy. In Washington, small businesses employ 51% of the state’s total workforce – or 1.3 million people.

At a recent event in Spokane, Washington Policy Center, joined by Congresswoman Cathy McMorris Rodgers and State Senator Mark Schoesler launched a new study, “Improving the small business climate in Washington State.” The study summarizes the results of comments we received from small business owners describing what regulations hurt or help them grow in Washington state.

What is clear from the feedback is that while our state is still somewhat competitive, with some small, easy-to-implement changes, we could be doing much better.

Topping that list of needed changes is to reduce or eliminate the business-and-occupation tax on gross receipts. Our current B&O tax structure requires business owners to pay tax not on profits, as you would assume, but on the total revenues a business collects. That means that even when a business loses money, the owner is still required to pay state B&O tax, increasing losses. A shift to a simpler business tax would be a much fairer way of operating.

Another issue important to Washington small business owners is the cost of the state workers’ compensation insurance. Washington requires business to buy coverage from the state-owned monopoly run by the Department of Labor and Industries. Allowing competition, as 46 other states currently do, would reduce costs without sacrificing the coverage employees need.

Minimum wage reform is also sorely needed. Regional differences, specifically between Puget Sound and Eastern Washington, make the high minimum wage particularly burdensome in rural communities. The same increase in the minimum wage that might provide a raise to a worker in Seattle can put a small employer in Eastern Washington out of business. Implementing a tiered system, based on regional differences, would certainly help and has seen success in neighboring states, such as Oregon.

State officials currently ban citizens from buying health insurance in other states, forcing consumers to choose among a small handful of approved in-state insurers. To reduce costs and increase choice and quality of health services, patients, as consumers of health care, should have more insurance options available. Those options should include an array of plans, from first-dollar full coverage to high-deductible catastrophic coverage only.

Our regulatory environment is long overdue for reform. In 2017 alone, agencies imposed another 6,517 pages of new rules on the public. The regulatory structure strangles small businesses, drives up the cost of entering the market, and impedes job creation.

Washington state is home to some of the biggest and most successful companies in the world. They each started as a small business. With some incremental regulatory changes, we can make sure our current small businesses will have a chance to grow and reach their full potential.

Mark Harmsworth is a former Washington state legislator and current Small Business director at Washington Policy Center, an independent research organization with offices in Spokane, Seattle, Olympia, and the Tri-Cities. Online at Washingtonpolicy.org.