Most businesses buy a lot of products and services locally. It is infeasible for your garbage collection service or other utilities to be sourced from outside the local area, for a lot of goods there are licensing or transportation issues which make them local, etc.
Internet companies are a huge exception to normal businesses. (which is why they're so awesome and can turn into scalable startups so easily). Income tax is on profits, so if you have a low margin business, or an earlier startup business, you'd be paying low total income taxes even at the 3-4% rate., so a tiny B&O direct expense and higher costs for facilities, contractors, etc. translates to a much higher equivalent income tax rate.
B&O isn't a good argument against setting up your tech company in WA; it's just an unfair tax which penalizes some businesses (inherently local ones) while favoring others (prof services and internet). (the only good argument against tech startups in Seattle is the somewhat-smaller-than-Bay-Area pool of tech workers, largely better now than it was 10y ago when they were just Boeing and Microsoft, and the lack of great VCs (there are a few, but not the best in the world, and not many vs. SF, NYC, or Boston).