3 Myths Tech Companies Want You To Believe About Taxes

When lawmakers propose tax changes to ensure large tech corporations contribute their fair share, a familiar set of myths emerges. These talking points are designed to prevent meaningful investment in our state's communities. We've broken down three of the most common myths and countered them with the facts.

Myth 1: Higher Taxes Will Drive Tech Jobs Out of Washington

Tech lobbyists frequently warn that increasing the corporate tax rate will force them to relocate, taking thousands of high-paying jobs with them. This threat suggests that state tax policy is the primary driver of hiring decisions.

The Reality: Hiring Remains Strong Despite Tax Code Changes

The data shows that changes in state tax codes do not correlate with a decrease in hiring. Tech companies hire where talent and infrastructure are available, not solely based on marginal tax differences. Consider New York State (NYS). In 2021, NYS made several income tax code changes, including an increase in the corporate income tax rate from 6.5% to 7.25% for corporations with yearly taxable income greater than $5 million (EY Tax News). If the myth were true, we would expect a significant decrease in hiring. Instead, tech employment in New York State continued to grow: - 2020: 325,418 tech workers - 2021: 334,742 tech workers - 2022: 362,776 tech workers

Myth 2: Tax Increases Are Causing Mass Layoffs

Another common talking point suggests that tax increases directly translate into mass layoffs, forcing companies to shed employees to cover the tax burden.

The Reality: Layoffs Are a Pre-Existing Business Strategy

Mass layoffs in the Washington State tech sector began long before any significant state tax changes. Companies perform layoffs as a strategic move to "recalibrate" or invest in new priorities, regardless of their state tax obligations. Tech layoffs in Washington State were substantial in the years prior to the 2025 B&O tax increase: - 2021: 2,100 layoffs - 2022: 13,000 layoffs - 2023: 32,000 layoffs - 2024: 6,350 layoffs - 2025: 31,000 layoffs (layoffs.fyi) The Washington State Legislature did increase the Business and Occupation (B&O) tax rate in 2025 to a modest 2.1% (Grant Thornton). However, the companies themselves have been candid about the actual reasons for job cuts. Amazon admitted that its 2025 layoffs were to "help make the company leaner and less bureaucratic, while it looks to invest in 'our biggest bets' including generative artificial intelligence" (CNBC). Layoffs are an internal business decision and are not credibly tied to modest state tax adjustments.

Myth 3: Tech Companies Simply Can't Afford to Pay a Higher Tax Rate

This myth relies on the public believing that tech companies operate on thin margins and that any tax increase will jeopardize their financial stability.

The Reality: Proposed Taxes Are a Drop in the Bucket for Profit Giants

The amount of money being discussed in state tax proposals is negligible when compared to the massive profits and cash reserves these corporations command. Let’s examine SB 5796, considered in the 2025 Legislative Session (WA State Legislature). This bill proposed a 5% tax levied on large employers for the portion of any employee's wages that exceeded the Social Security wage threshold (approximately $184,500). What would this mean for Microsoft, for example?

1. Microsoft employed approximately 50,000 people in Washington State in 2024 (Kitsap Sun).

2. Taking a generous estimate that every single one of those employees earned $300,000 a year, the total tax owed to Washington State would be approximately $288 million.

- Calculation: $300,000 (salary) - $184,500 (threshold) = $115,500 (taxable wages). 5% of $115,500 = $5,775 tax per employee. $5,775 x 50,000 employees = $288,750,000.

This $288 million is an incredibly meaningful amount for the State’s budget—it could backfill the loss in federal funding for SNAP for our entire state for more than two months. However, for Microsoft, a corporation with massive profits, that amount is only 0.14% of their total 12-month profit (Microsoft - Revenue). The argument that these companies "cannot afford" to contribute their fair share simply does not hold up to scrutiny.