In new letter to governor, Seattle tech leaders say income tax proposal will hurt state’s AI development – GeekWire
Seattle tech leaders warn that a new income tax proposal could halt the region’s push for artificial intelligence.
In a letter sent on Monday to Gov. Bob Ferguson, a group of AI researchers, inventors, and investors argues that higher taxes on high earners and investment incentives will push top talent and startups elsewhere.
They urged state leaders to “pause” the so-called “millionaire tax” — a federal income tax that would impose a 9.9% tax on personal income over $1 million — and Washington’s capital gains tax hike.
“These policies would hamper Washington’s ability to continue to grow the technology sector, which is the backbone of our economy, and would delay the AI innovation and investment momentum that we must accelerate, not discourage,” the letter reads.
The group frames the issue as an AI competition problem, writing that Washington is “competing with the talent needed to build and scale AI products, companies, and jobs” but is “beginning to lose momentum” compared to rival jurisdictions.
“AI is at a critical juncture, and a hasty decision now will seriously damage Washington’s economic future,” they wrote.
Citing Silicon Valley Bank’s latest State of the Markets report, they say Seattle has seen a “significant” drop in startups over the past three years, while San Francisco is benefiting from a deep AI ecosystem and Texas is attracting companies with what it describes as a favorable tax climate.
The report shows that VC-backed startups in Seattle are down 30% from 2022. San Francisco is the only tech hub to see growth in company formation, according to the report, driven by the AI boom.
Signatories to the letter include Pedro Domingos, professor emeritus of computer science and engineering at the University of Washington; Brian Hall, former executive at Microsoft, Amazon Web Services, and Google; Oren Etzioni, former CEO of the Allen Institute for Artificial Intelligence; Read AI founder and CEO David Shim; CloudMoyo CEO Manish Kedia; Founders’ Co-op general partner Aviel Ginzburg; AZX CEO Aaron Goldfeder; Introducing Black CTO Cameron Etezadi; Salesforce engineering lead Paul Brown; AJW Services managing director Adam Wray; and longtime software engineer and writer Vijay Boyapati.
The Wall Street Journal’s editorial board cited the letter, writing that “Democrats are putting their economy and jobs at risk if they go after California’s tax cuts, spending and other taxes.”
GeekWire reached out to the office of Gov. Ferguson for comment.
The proposed income tax, Senate Bill 6346, was approved by the Washington Senate earlier this month and is being debated by House lawmakers. Gov. Ferguson criticized the proposal as doing too little for small businesses and low-income residents in the state. Democrats made the following changes but the governor told the Washington State Standard on Friday that the bill “still has a long way to go.”
The tax will go into effect in 2030 and is expected to generate an estimated $3.7 billion annually.
An analysis from the Tax Foundation concluded that Washington’s proposed billion-dollar tax would “make the state less desirable for high-income earners, especially in the nation’s vital technology sector.”
Some in Seattle’s tech ecosystem have pushed back at the idea that higher taxes on high earners would pose an existential threat to the startup economy.
Washington state has the second-best state and local tax system in the country, according to the Institute on Taxation and Economic Policy.
The debate over the “millionaire tax” comes as the state struggles to close a budget deficit of more than $2 trillion through spending cuts and a slate of potential tax reforms. Meanwhile, many large tech employers cut thousands of jobs.
The legislative session is scheduled to end on March 12.
