Microsoft notably quiet about Washington lawmakers’ tax hike

SEATTLE – Washington state is quietly giving Microsoft a tax increase, and the company isn’t complaining about the $57 million tax hike over the next two years.

The state budget deal agreed to in Olympia this week included the closing of a number of tax breaks. This one was the repeal of a software machinery and equipment sales tax exemption, the Seattle Times reported.

The budget line doesn’t mention Microsoft by name, but it says the budget change applies to a software company with more than 40,000 employees that has been in the area since at least 1981.

Other companies can continue to claim the sales tax break, which exempts manufacturers and software-makers from paying sales tax on equipment they buy to make their products.

Microsoft acknowledged the tax increase.

In a statement, DeLee Shoemaker, Microsoft’s senior director of government affairs, confirmed the company expects to pay the higher tax amounts once the bill is signed.

Shoemaker did not say whether the company supported or opposed the tax shift – but lawmakers would have been unlikely to impose the higher tax if the company had objected.

The $38.2 billion two-year operating budget agreed to by lawmakers was negotiated in part by two former Microsoft employees.

“We had a discussion with them about this, and they didn’t object to it,” said state Rep. Ross Hunter, D-Medina, the chief House budget negotiator, who worked for Microsoft for 17 years.

“When we looked at the tax exemptions, we were looking at ones that would do the least amount of economic damage. This was one that did not cause economic damage,” said Sen. Andy Hill, R-Redmond, also a former Microsoft manager.