Microsoft could leave Washington state if taxes get too high

As layoffs ripple through the Seattle-area tech scene, one of Washington’s largest employers is sounding the alarm on the state’s aggressive push for even higher taxes and warning that the policies of Democrats led by Governor Bob Ferguson could drive jobs out of the region entirely.

Microsoft President Brad Smith said in a recent interview with Bloomberg that Washington’s growing tax burden threatens to “devastate” the local economy if lawmakers continue targeting the state’s most productive industries.

“If the state’s tax burden becomes prohibitive, then every company will reconsider where they put jobs,” Smith said. “It’s more like air leaking out of a balloon than the balloon popping.”

Smith’s warning comes as job cuts sweep through the tech sector. Microsoft has laid off more than 3,200 workers in the region this year. Amazon cut 2,300, while Meta, Oracle, and Salesforce also trimmed hundreds.

Meanwhile, Microsoft’s Vancouver, BC office, just across the border, has more than doubled its headcount since the pandemic. Smith said expansion there could accelerate if the US government follows through with a $100,000 H-1B visa fee hike, or if Washington state “goes off the rails” on taxes.

“You don’t have to look far to find Vancouver,” Smith quipped, hinting that the company is already diversifying away from Redmond.

Governor Ferguson and his Democratic allies have already raised state taxes by a record $12.2 billion over four years, yet the latest state revenue forecast shows Washington’s budget $1.2 billion in the red. Instead of tightening spending, Democrats are doubling down, proposing new wealth and payroll taxes aimed squarely at major employers and high earners.

The payroll tax proposal mirrors Seattle’s “head tax,” which is largely paid by just ten companies, including Amazon. That tax pushed Amazon to move thousands of jobs to Bellevue and now has many companies threatening to move out of state.

Now, progressive leaders such as incoming Seattle mayor Katie Wilson are calling for even more corporate levies, citing “affordability” as their justification while ignoring the exodus of private-sector jobs and investment.

Microsoft’s Smith isn’t the only one concerned. Economists say Washington’s heavy reliance on sales, property, and business taxes, combined with the new capital gains tax and Ferguson’s rent control law, has created a chilling effect on investment and construction.

Developers warn rent control is already reducing housing starts, and forecasters say construction revenue, once a key driver of state growth, has fallen sharply.

Meanwhile, Ferguson continues to blame Donald Trump for Washington’s financial troubles, citing “federal cuts” even as his own budget sinks under the weight of record spending.