Ah, Washington State. Land of rain, coffee, tech bros, and a government that just can't see a cash cow without reaching for the milking stool. Once upon a time, this mossy paradise was the undisputed king of business-friendly climates. No personal income tax, a thriving startup ecosystem, and a permanent Starbucks-per-square-inch advantage. But fast-forward to April 2025, and it seems the state government decided that "best" is a relative term—especially if you redefine "business-friendly" to mean "bring your wallet, and maybe a blood donation too."
Washington lawmakers just wrapped up their legislative session by giving the business community a nice little parting gift: the largest tax hike in state history. Cue the champagne — but don't forget the receipt, because it's about to have a 10% tax added.
Capital Gains? More Like Capital Pains
First up: Senate Bill 5813, lovingly dubbed "Robin Hood's Retirement Plan" by nobody, because even Robin Hood would've had second thoughts. Washington's capital gains tax is now a progressive rate: 7% for gains up to $1 million, and 9.9% for gains above that. That's right — if you dare to make a successful investment in Washington, prepare to be greeted with all the enthusiasm of a TSA agent finding a "suspicious" water bottle.
It's a bold move for a state that already got smacked around in court over the original capital gains tax passed in 2021. But why stop at controversial when you can turbocharge the controversy and slap a "new and improved" sticker on it?
Got a Digital Business? Congratulations, You're a Retailer Now!
Next, say hello to Senate Bill 5814, which stretches the definition of "retail" so far it could qualify as Olympic gymnastics. Now, digital services like advertising agencies, software developers, and IT support providers are magically "retailers." Starting in October 2025, they'll be expected to collect sales tax from their customers like they're slinging overpriced candles at a mall kiosk.
Because nothing says "support your local startup" like forcing a two-person SaaS company to navigate the same sales tax bureaucracy as a Walmart Supercenter.
The B&O Tax: Now with 20% More Sadness
And if that wasn't enough razzle-dazzle for one legislative session, House Bill 2081 kicks service businesses squarely in the financial teeth. The B&O (Business & Occupation) tax — already a special little quirk of Washington's "unique" tax code — is getting a bump. For service businesses making over $5 million a year, the rate jumps from 1.75% to 2.1%.
Math may not be the Legislature's strong suit, but "20% rate hike" is pretty hard to spin as "minor adjustment." Not that they didn't try.
Oh, and if you're a tech behemoth like Microsoft or Amazon? Enjoy your "Advanced Computing Surcharge" — lovingly inflated from 1.22% to a whopping 7.5%. Also, that $9 million payment cap? Gone. Say hello to a new $75 million cap, because apparently the goal is to "cap" your optimism right out of existence.
Strategic Genius or Strategic Gaslighting?
Rep. April Berg (D-Mill Creek) insists that "Washington is still the best place in the United States to do business." Which is adorable. It's like burning down a house and then listing it on Zillow as "cozy open-air concept."
Meanwhile, tech leaders are sounding alarms loud enough to trigger tsunami warnings. Kelly Fukai, CEO of the Washington Technology Industry Association, was refreshingly blunt: "If our state targets the tech sector with billions more in taxes while in the midst of national economic turmoil… it would be an unmistakable signal to the market that tech is no longer welcome here."
In political terms, that's what's known as "saying the quiet part out loud."
Moo, Moo, Mother-Techers
Raji Subramanian, a longtime Seattle tech executive, perhaps said it best: "They think they can milk this cow forever, but cows eventually always move to the greener pastures."
Translation: Entrepreneurs aren't dumb. They can read a balance sheet. And when your cost of doing business skyrockets, "greener pastures" start looking real good — especially places like Texas, Florida, and North Carolina that are practically rolling out the red carpet (and not charging sales tax on it).
If Washington politicians think startups and tech giants will just sit quietly while they get bled dry, they've clearly never seen an engineer's resignation letter — or a moving van convoy headed toward Austin.
"We're Running on Razor-Thin Margins Here!"
And it's not just the techies crying into their kombucha. Scott Foreman, CEO of advertising agency Copacino + Fujikado, pointed out that his industry already runs on margins thinner than a vegan's patience at a BBQ.
Adding a sales tax to advertising services? That's not just "unhelpful." It's "guaranteed to make businesses pay more to get their message out," which in turn means clients will pass on those higher costs to consumers.
It's the economic equivalent of setting yourself on fire because you thought it would save money on heating.
Governor Ferguson: Man of Mystery
The final wild card here is Governor Bob Ferguson. He's said he'll "carefully review all revenue increases" before making a decision. Which is political-speak for "I'm going to let these bills quietly become law while pretending to agonize over it."
After all, if you don't actually sign the bill, you can plausibly deny ever liking it — much like a bad tattoo or a "temporary" COVID-era haircut.
A Wealth Tax Dream Deferred (For Now)
Interestingly, the Legislature didn't manage to ram through the much-feared payroll and wealth taxes — at least not yet. That’s being saved for next session, because apparently it's important to pace yourself when you’re trying to drive away your biggest taxpayers.
State Senate Majority Leader Jamie Pedersen (D-Seattle) offered a little TED Talk about "what a world could look like" with better-funded public schools and "less regressive" taxation — presumably while standing in front of a burning pile of business licenses.
"Modernizing the Tax Code" — Because 100-Year-Old Systems Are So Retro
Sen. Noel Frame (D-Seattle) insists this whole effort is just "modernizing" Washington's "nearly 100-year-old tax code." Because when you’re about to squeeze billions of dollars from businesses during a shaky economy, it’s comforting to say you’re doing it for modernization.
Nothing says "21st-century leadership" like wrecking a thriving economy in the name of "equity."
Spoiler Alert: Businesses Have Other Options
What Washington lawmakers seem to forget — or simply don't care about — is that business owners have options. Other states would kill to have the kind of high-skill workforce and venture capital ecosystem that Seattle boasts.
Places like Miami, Austin, and even Boise are practically drooling at the thought of snatching up disillusioned tech workers and entrepreneurs. And guess what? They’re not adding a "Stealth Wealth Surcharge" to your startup dreams.
So, Is Washington Still the Best Place to Do Business?
Let's just say... if you define "best" as "most creative at bleeding you dry," then sure.
If you define "best" as "where a startup can survive its first three years without needing a GoFundMe," then maybe start packing your bags.
And if you define "best" as "a place where lawmakers listen to business concerns instead of quoting TED Talks about utopia," then buddy, you might already be halfway to Austin.
Final Thought: Love It or Leave It?
Washington's natural beauty, brilliant talent pool, and tech history still make it a major force. But for how long? Every new tax hike is another chip off the foundation. Eventually, even the best structures crumble if you hit them hard enough with "strategic approaches."
For now, business leaders are holding their breath, hoping that maybe — just maybe — someone up in Olympia realizes that you can't build a better society by burning the house down and calling the ashes "modern art."
But if history is any guide, I'd keep one hand on the U-Haul app. Just in case.
