Amazon, Microsoft on opposite ends of tax debate in Olympia

Apr 5, 2019, 5:12 AM

Microsoft and Amazon appear to be on opposite sides of a proposal that would significantly hike state taxes on big businesses in the name of education.

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A recently introduced bill — HB 2158 — aims to dump roughly a billion dollars into the state’s workforce education account over the next four years. The money would go toward more financial assistance to those looking for degrees in high-demand areas such as engineering or nursing, and of course, tech.

  • It would increase the state B&O tax by varying degrees between 20 to 33 percent. But it mandates a top rate for Microsoft and Amazon — a whopping 67 percent business tax increase for “advanced computing businesses” with “worldwide gross revenue of more than one hundred billion dollars.”
  • The bill further proposes a 20 percent hike to the B&O tax for about 40 business categories involving technical services. This includes telecom, engineering, medical, and finance.
  • There is a 33 percent proposed tax raise on tech firms with more than $25 billion in annual revenue.

Amazon and Microsoft

The state’s major tech companies — such as Amazon and Microsoft — are the largest employers of high-skilled talent in the region.

An Amazon spokesperson offered this statement on the bill:

We have a long history of supporting local education through levies, gifts to higher education around computer science, and our Amazon Future Engineer program. We support raising funds for higher education and believe a tax percentage increase applied over a broader base of classifications will most effectively generate similar and more consistent revenues to the state over the long term.

But in a March 20 op-ed published in The Seattle Times, Microsoft’s president and chief legal officer Brad Smith said:

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 percent rate.

Let’s use this opportunity to create in our state at least a partial antidote to the current lack of access to new skills and higher education that’s bothering the nation. Let’s build and ‘recession proof’ a workforce education fund that’s open on fair terms to everyone.

Access to a fair deal has always constituted a fundamental ingredient of the American dream. Let’s nurture this dream for all the families of Washington state.

Smith notes that the state’s B&O tax has fluctuated since the 1990s, but he promotes a return to a 1.8 percent tax rate which would be confined “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.”

Other commentary

In an hours-long House hearing last week, several representatives from the business and education community came out on both sides.

“I would encourage the state to move forward and to continue to invest in higher education,” one woman said.

“From a student achievement standpoint, a very critical one, to help all students have access to a fantastic pathway to a career and college,” said another.

But others argued otherwise.

“This bill will affect 95,000 businesses in the state, most of those, well over 90 percent, are small businesses,” one man said.

“The surcharge will easily turn projects into losses for many firms, the resulting effect is that firms will be forced to reduce operating costs,” another testified.

Hospitals and newspaper industry reps also spoke out against the proposal saying it would hurt their budgets and lead to cuts. It’s something the newspaper industry said it could not afford.

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Amazon, Microsoft on opposite ends of tax debate in Olympia