Microsoft President Brad Smith has issued a stark warning that Washington state's escalating tax burden could compel companies, including Microsoft, to relocate jobs and operations. This announcement comes amidst a period of significant layoffs in the Seattle-area tech sector and a progressive political push for increased corporate levies. Smith's statements underscore growing concerns that the state's tax policies risk devastating the local economy.
Smith indicated that if Washington's tax climate "goes off the rails," companies would "reconsider where they put jobs," as reported by Bloomberg. Microsoft has already significantly expanded its Vancouver, British Columbia office, doubling its headcount since the pandemic, a trend that could accelerate if U.S. visa costs rise or state taxes become prohibitive. This stance notably contrasts with Microsoft co-founder Bill Gates' historical support for higher taxes on the wealthy.
The sentiment extends beyond Microsoft, with a spring 2025 survey from the Association of Washington Business revealing that 12% of companies are considering moving out of the state, with 61% citing taxes as the primary reason. Amazon previously moved thousands of jobs to Bellevue, signaling a similar response to Seattle's rising business taxes. Progressive leaders, including incoming Seattle mayor Katie Wilson, continue to advocate for more corporate taxes, citing affordability issues.
Recent tax changes, such as the new capital gains tax and the expansion of retail sales tax to digital and IT services, are central to these corporate anxieties. Lawmakers are also considering uncapping an "advanced computing surcharge" on large tech firms, further intensifying the debate. Microsoft has actively engaged in this discussion, reportedly pledging $1 million to the Washington Coalition for Responsible Taxes and Spending.
Economists and business advocates warn that these policies could create a chilling effect on investment and construction, potentially leading to a substantial exodus of high-paying jobs. Studies suggest that if even a quarter of high-earning individuals subject to the capital gains tax were to leave, Washington could face a loss of an estimated $16 billion in wages and $1.6 billion in tax revenue. The ongoing tension highlights a critical juncture for Washington's economic future.