Tax proposals pose a significant threat to WA’s innovation
Washington is known as a global hub of innovation, and the locally owned companies that make this possible are under attack by proposed taxes that would cost between $13 billion and $17 billion.
“The progress made by the state on investments in essential infrastructure, innovation proposals, and programs that strengthen communities and create good jobs for Washingtonians all means nothing if these taxes are approved,” said Raji Subramanian, co-founder and CEO at Stealth AI Startup. “We are already struggling to fill open positions, grow and expand – how do legislators think we, and specifically start-ups, can do that if we are hit with huge tax bills?”
Together, the Association of Washington Business, Bellevue Chamber of Commerce, Seattle Metropolitan Chamber of Commerce, and Washington Roundtable are closely coordinating and urging lawmakers to address a projected $13+ billion state budget shortfall without raising taxes on Washington’s hometown businesses. The organizations are united with two-thirds of Washington voters who in a January survey agreed that raising taxes is a bad idea and could cost individuals and businesses billions per year, resulting in an even higher cost of living, a weaker economy and depressed job growth.
Washington has emerged as a world-leading cloud and AI talent hub because of talent attraction, research and development investment, and a thriving ecosystem of innovation partners. Its powerhouse status is bolstered by major tech companies like Microsoft, Meta, AWS, and Google Cloud. The University of Washington plays a central role in cultivating top-tier talent, with at least 10% of local AI startup founders holding a UW degree.
Washington ranks 5th in start-up activity, 7th in investor activity and 5th in job activity, compared to all other states in the U.S.
All three of these rankings will likely be impacted should the state choose to enact the largest tax increase in history of our state.
The state’s budget deficit is not due to a recession, as it was in 2009; it is also not due to declining revenues. It is because spending has eclipsed growing revenues and lawmakers spent the rainy-day fund and one-time monies and assumed more revenue than was forecast. Both Senate and House majority caucuses have rolled out tax proposals they hope to pass before sine die on April 27.
In response to recent tax proposals, organizational leaders said:
“Washington’s economy can only thrive when employers can grow, innovate, and create jobs. As state legislators make final decisions on how to address the projected budget shortfall, it is critical they avoid actions that undermine the businesses and jobs needed to get us through this period of national and global economic uncertainty and fuel opportunity and prosperity over the long term.”– Steve Mullin, president, Washington Roundtable
“Washington is a state of innovation and beauty, with unique advantages -- but also with high costs to do business. Every new tax makes it that much harder for employers to create jobs, or even to stay open. It's time for lawmakers to make it easier, not harder, to start and grow a business, to be champions for the economy, not champions for new taxes.” – Kris Johnson, president and CEO, Association of Washington Business
“The history of the Puget Sound region is synonymous with innovation, and it has enhanced our state’s economy in so many ways. Our robust tech sector accounts for nearly 1.5 million direct and indirect jobs and represents 22% of the state economy – an astounding 9.4% of jobs in Washington are tech jobs, and they account for 22% of all the compensation paid in the state. These job creators have choices in terms of where they decide to call home – where they can be most successful – and we encourage state leaders to embrace making it easier to start and grow an innovation business in Washington state.” - Rachel Smith, president and CEO, Seattle Metropolitan Chamber of Commerce
“Washington is already one of the hardest places in the country to start and grow a business. We have the highest first-year business failure rate in the nation, with over 40% of new businesses closing within 12 months. Within five years, more than half fail. Over 10 years, a staggering 76% of Washington businesses don’t survive — the worst rate in the country. Meanwhile, Seattle’s startup ecosystem just dropped 10 spots in the global rankings — the largest decline of any major city. Given these alarming trends, now is exactly the wrong time for Olympia to push even more taxes on innovation, entrepreneurship, and job creation.” – Joe Fain, president and CEO, Bellevue Chamber