Microsoft President Brad Smith opposed proposed Washington state taxes in April 2025, warning that they could raise consumer prices, reduce jobs and hurt the state’s tech sector. He described business opinion as “remarkably united,” but that was his characterization—not the result of a survey or proof that every business agreed. The payroll and financial-asset taxes at the center of the dispute did not pass that year.
What Brad Smith and business leaders opposed
GeekWire reported on April 2, 2025, that a coalition letter urged Washington lawmakers to reconsider proposed tax and budget measures. The letter was signed by executives of four business organizations and 65 other business leaders from across the state. The organizations named in the report were the Bellevue Chamber, Association of Washington Businesses, Washington Roundtable and Seattle Metro Chamber.
In the interview, Smith said: “From the border of Idaho to the Pacific Ocean and from Canada to Oregon, the business community in the state is remarkably united on this.” That describes Smith’s view of the coalition’s breadth; it does not establish that all Washington businesses shared the position. The letter called the proposals “the largest tax increases in state history” and criticized what its signatories described as unsustainable spending growth. Those are the coalition’s advocacy claims.
Smith had also said at GeekWire’s Microsoft@50 event in March 2025: “I have, frankly, never been more worried about the future of the tech sector in Washington state as I am today, in part because of the proposal.”
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What taxes were in the Senate Democrats’ proposal?
On March 20, 2025, Senate Democratic budget leaders released a proposal for revenue in Washington’s 2025–27 operating budget. Two measures drew particular attention: a payroll tax on large employers and a tax on certain financial assets held by very wealthy individuals. These were proposed taxes, not taxes that had already taken effect.
| Proposal | Who or what it would have covered | Stated rate or estimate |
|---|---|---|
| Payroll tax | Large employers’ payroll expenses above the Social Security wage threshold; the release used $176,100 per year as the threshold at the time. | Proposed rate of 5%. Senate Democrats estimated approximately $2.3 billion per year once fully implemented. |
| Financial intangibles tax | Certain financial assets held by individuals with more than $50 million in those assets. | Senate Democrats estimated approximately $4 billion per year, starting in fiscal year 2027. |
The rates, threshold and revenue figures describe the March 2025 proposal. The revenue amounts were projections by its sponsors, not money collected. The package also addressed property-tax growth limits, selected tax preferences and the state sales-tax rate.
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Why Smith objected—and how the sponsors defended the plan
Smith’s concern about business effects
Smith argued that the proposed measures could increase consumer prices, reduce jobs and harm Washington’s technology industry. He called for cost controls, spending restraint and renewed emphasis on economic development. These were his predictions and policy judgments; the cited reporting does not establish that the proposals caused price increases or job losses.
The political backdrop was a contemporaneous estimate of about $16 billion in potential state budget shortfall, as cited in coverage of the proposals. Smith also questioned relying on a new tax to balance the budget. As GeekWire reported from Gov. Bob Ferguson’s Tuesday news conference, Ferguson said: “It would be irresponsible to rely on an untested new tax to balance our budget.”
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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsThe sponsors’ case for revenue
Senate Democrats said the package would support public schools, health care, public safety and other services while shifting more of the tax burden toward wealthy individuals and large corporations. Sen. Noel Frame, then vice chair of the Senate Ways and Means Committee for Finance, said the sponsors wanted to avoid balancing the budget “entirely through devastating cuts” or relying on what she called a regressive tax code. That was the sponsors’ rationale for the proposal, rather than an independent finding about its effects.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Did Washington pass the proposed payroll or wealth tax?
No. The proposed payroll tax and financial intangibles tax did not pass during the 2025 legislative session. Their proposed rates and projected revenues should not be confused with taxes collected or current law.
Washington did enact separate tax changes in 2025, including changes to the capital gains tax, expanded retail sales-tax coverage for additional digital and professional services, and changes to B&O tax rates and the Advanced Computing Surcharge. Those measures were distinct from the payroll and financial-asset taxes that Smith and the coalition opposed in the April report.
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