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Tax hike on Amazon and Microsoft to fund higher ed in Washington state passes legislature

Update May 21: Gov. Jay Inslee signed the education bill into law.

I just had the honor of signing HB 2158 into law, which advances two of my major proposals: it creates a statewide #freecollege program for eligible students and expands #CareerConnectWA learning. Thank you to Rep. Hansen and the many #waleg who championed this landmark bill.

— Governor Jay Inslee (@GovInslee) May 21, 2019

Washington state lawmakers passed a major tax hike on the region’s biggest tech companies over the weekend.

The bill increases the state business and occupation tax by 67 percent on “advanced computing businesses with revenue of more than $100 billion.” That category applies to two companies: Amazon and Microsoft.

Microsoft has been pushing for the bill as a way to increase the number of Washington students who are prepared for the tech jobs of the future. The Bureau of Labor estimates that there will be 1.4 million computer-science related jobs and just 400,000 graduates with the skills needed to fill them by 2020.

Update: Irene Plenefisch, Microsoft’s government affairs director for Washington state, shared this statement with GeekWire:

Education beyond high school has long been an onramp to success in Washington state and our nation, and a priority for Microsoft. We’re proud to have supported HB 2158 because it will help recession-proof higher education in our state and expand access, especially for those from low and middle income families, to the broad range of postsecondary education opportunities that kids in our state will need to succeed in the future.

It isn’t clear exactly how much each company would be on the hook for under the tax hikes. Business and occupation taxes are kept confidential by the Washington Department of Revenue. But the bill limits the amount each company will pay to more than $4 million and less than $7 million annually.

Update: An Amazon spokesperson provided this statement to GeekWire:

“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 welcomed the constructive dialogue on HB 2158 and are supportive of the outcome that delivers increased funding for higher education in Washington State.”

Advanced computing companies with revenue between $25 billion but less than $100 billion will see their business and occupation taxes increase by 33 percent.

In addition to the Big Tech bump, the bill increases the business and occupation tax for 44 categories of service providers by 20 percent. That group includes law firms, engineering, insurance carriers, financial services, telecommunications, and software publishing.

The money raised by the tax will go into a new Workforce Education Investment Account and fund the new college grants, student loan refinancing programs, and other initiatives designed to expand access to higher education for residents. The legislature expects to collect about $370 million for the account between 2019-2021. The increased taxes would take effect Jan. 1 2020.

The legislation also establishes an oversight board to council the legislature on which workforce education programs to fund. It would make grants available to all eligible students in Washington state to cover costs of higher education. Grants will be awarded based on financial need.

Over the weekend, the bill cleared both houses of the Washington state legislature. It now awaits Gov. Jay Inslee’s signature.

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