Microsoft says it’s determined to pay more of its fair share in improving quality-of-life in its home state of Washington. In the process, it also appears to be branding itself as the anti-Amazon.
Earlier this week, the software giant backed a new bill that would actually increase the software company’s tax burden.
As the Seattle Times reports, Washington State HB 2158 seeks to raise a billion dollars to invest in workforce education for state students, including in high-demand subjects such as computer science, engineering, and nursing. It would do so by increasing taxes on sectors that benefit the most from a highly skilled workforce. The bill proposes hiking state business and occupation tax by 33% on tech firms that take in more than $25 billion in annual revenue.
Then, in a section that only affects Microsoft, the bill presents a 67% business tax increase for “advanced computing businesses” that make more than $100 billion a year. Only two companies meet that criteria: Redmond-based Microsoft and its Seattle neighbor Amazon.
The company’s embrace of the bill shouldn’t come as a surprise: Microsoft President Brad Smith doubled down on his company’s commitment to fund education in a Seattle Times op-ed last week.
“Let’s ask the largest companies in the tech sector, which are the largest employers of high-skilled talent, to do a bit more,” he wrote. “This means that the largest tech companies would pay somewhat more than the 1.8 percent rate.”
Microsoft’s public appeal to pay more taxes, while applaudable, also feels like a PR move against its rival. The latter has been repeatedly subject to criticism for what many see as a failure to pay its part in taxes. Amazon paid $0 in federal taxes on $11.2 billion profits last year, reports Fortune. It’s the second year in a row it owed nothing.
Rep. Gerry Pollet, D-Seattle, a co-sponsor of the new bill, told the Seattle Times that she had heard an Amazon lobbyist lament that the tech giant was caught off-guard by Microsoft’s tax idea.
“Amazon was surprised to be included in such a public ‘hey, let’s do this’ by Microsoft,” she said. “Amazon has groused in meetings down here that Microsoft is doing this mostly as a way of making Amazon look bad.”
A prominent effort last year to impose a “head tax” on large companies in Seattle–aimed at supporting affordable housing–failed amid strenuous lobbying efforts by Amazon and other firms. At one point, Amazon appeared to threaten the city by pausing new office construction.
Microsoft has been trying to sound a decidedly different tone. In January, the tech giant announced a $500 million initiative to make housing in Seattle and its surrounding suburbs more affordable. The growth of the city’s tech sector has been widely attributed to a rise in housing costs that are pricing out non-tech workers.
Pollett, who previously battled Microsoft over extensive state tax breaks, says the swift shift is rather surprising. “All of a sudden they’re down here offering to pay for the obvious needs of the state.”