Microsoft is asking Washington State to increase its taxes and Amazon is less than thrilled

  • Microsoft is asking the state of Washington to raise taxes on tech companies to fund more workforce education.
  • The company is backing a new bill introduced this week.
  • But there’s a special provision in its request as well: tax companies that make over $US100 billion in annual revenue even higher.
  • There’s only two companies in that bucket, itself and its rival Amazon.

Spend any time in the greater Seattle area and you can’t help but notice the palpable tension between the Microsoft camp and the Amazon camp.

Microsofties used to be the top dog of the area, beloved and hated in equal measure. But the rise of Amazon has changed that, much the same way that the rise of Facebook knocked Google off its king-of-the-hill perch in Silicon Valley.

And now Microsoft has come up with a clever idea to win friends in the region with the possible added perk of annoying Amazon in the process.

It is backing a plan to raises taxes on the state’s high tech sector, making companies with annual revenues that exceed $US100 billion a year pay even more.


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There are only two companies there that fit that bill: Microsoft and Amazon.

The extra taxes will be used to fund workforce education. The bill, Washington State HB 2158, was introduced this week and intends to pay for more higher education programs and student aid.

Last week, just before the bill was formerly introduced, Microsoft’s top lawyer, president Brad Smith co-authored an op-ed in the Seattle Times offering full-throttled support for it. His co-authors were leaders from the state’s university system.

Brad SmithPedro Fiúza/NurPhoto via Getty Images

That op-ed advocated raising state business taxes from its current rate of 1.5% to a minimum of 1.8%.

But Smith didn’t want this applied equally to all businesses. “Confine it to those that most depend on – and will benefit from – hiring these skilled employees. This means firms that provide professional, engineering, technical and other similar services. And second, let’s ask the largest companies in the tech sector, which are the largest employers of high-skilled talent, to do a bit more. This means that the largest tech companies would pay somewhat more than the 1.8 per cent rate,” he and his co-authors wrote.

Lawmakers were floored by Microsoft’s support, they told the Seattle Times’ Danny Westneat. The company has a long, successful history of pushing for tax breaks.

But Amazon? Not so much, Westneat reports. Lawmakers said they heard from Amazon’s people complaining that Microsoft was supporting this new tax partly to make Amazon “look bad” if it tried to oppose the idea.

And Amazon isn’t thrilled with this.

The company tells us, “We have a long history of supporting local education through levies, gifts to higher education around computer science and our Amazon Future Engineer program. The problem with this proposal is that it disproportionally impacts one B&O tax classification. We would be supportive of a lower tax percentage increase applied over a broader base of classifications that would result in similar revenue to the state.”

This situation comes after Amazon reneged on its HQ2 deal with New York after protesters complained about Amazon’s tax breaks from that deal.

In contrast, this is the second peacock-walk Microsoft has made in recent months over programs in Seattle. The company also announced in January a new a $US500 million affordable housing fund.

Microsoft is not, however, the only company in recent times to offer to pay higher taxes for the good of its community. For instance, Salesforce made waves in San Francisco last year when its CEO vocally backed a new tax of tech companies in that city that raises money to combat homelessness.

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