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Microsoft President Brad Smith (left) interviewed by GeekWire co-founder Todd Bishop at GeekWire’s Microsoft@50 event at Town Hall in Seattle on Thursday. (GeekWire Photo / Kevin Lisota)
Microsoft President Brad Smith warned that new tax proposals from Washington lawmakers would do “lasting damage” to the tech sector in the company’s home state.
Senate Democratic budget leaders released their revenue proposal for the state’s 2025-27 operating budget on Thursday. It includes a new 5% payroll tax on large employers, and a new “financial intangibles” tax on wealthy individuals.
Speaking at GeekWire’s Microsoft@50 event Thursday at Town Hall in Seattle, Smith said the proposal would increase prices for consumers, reduce jobs, and hurt the tech industry.
“I have, frankly, never been more worried about the future of the tech sector in Washington state as I am today, in part because of the proposal,” Smith said.
The payroll tax would mimic the so-called JumpStart tax in the City of Seattle, imposing a tax on payroll expenses above the Social Security threshold — currently $176,100 per year. It would impact companies with $7 million or more in payroll expenses, and would raise about $2.3 billion annually and go to public schools, healthcare, and other programs.
Companies in Seattle that pay the JumpStart tax would be exempt.
The proposed tax would hit Microsoft, based in Redmond, Wash., and one of the state’s largest employers.
“Unfortunately, if you make jobs more expensive, it becomes harder to keep jobs or to grow jobs here,” Smith said.
The tax on wealthy individuals would tax $10 on every $1,000 of assessed value of stocks, bonds, exchange-traded funds, and mutual funds held by people with more than $50 million in these assets. It would impact about 4,300 individuals and generate $4 billion per year for public schools.
Smith said he lived in France when the country enacted its own wealth tax and said it “caused wealthy individuals to move.” France replaced the tax in 2018, limiting it in scope to real estate wealth.
“So what failed in France is now being proposed for Washington,” Smith said.
Washington passed a 7% capital gains tax in 2021 that sparked controversy within the Seattle tech sector.
The new tax proposal from the Senate Democrats comes as Washington state faces a budget shortfall estimated to be as high as $16 billion. Other plans include lifting caps on property tax hikes and lowering the statewide sales tax.
Washington is one of a handful of states that does not have an income tax.
“Rather than balance our budget entirely through devastating cuts or doubling-down on our regressive tax code on the backs of working families, we’re asking the wealthiest among us to finally do their part and pay what they owe so that we can fund great public schools, health care, public safety, and the services that our most vulnerable residents are counting on,” Sen. Noel Frame (D-Seattle) said in a statement.
Smith said that Microsoft has advocated for higher taxes in Washington state in the past. But he expressed concern that the state is “seeking to increase its spending at a faster pace than basically any other part of the economy.”
“I hope there will be an opportunity to just ask people to think about what this will mean for our economy,” Smith said. “We know this: You can’t have a healthy company without a healthy community, but you can’t have a healthy community without healthy business — and that, I believe, is at stake.”
House Democrats are expected to release their own proposal Friday. The two sides must agree to a final spending plan by April 27.
