Microsoft's Brad Smith Warns: 'Wake Up' as State Approves Controversial Tax Plan

Brad Smith, Microsoft's president, delivered a strong message regarding the economic prospects of Washington state, stating that the technology industry driving its progress is underappreciated. He urged legislators to prioritize fostering this sector just as much as extracting income from it.

"Lord, grant us state lawmakers who prioritize economic growth rather than merely taxing our industries to fund other matters we hold dear," Smith stated.

Smith’s remarks on Tuesday at theصند Technology Alliance The comments made at the State of Technology luncheon were his strongest yet regarding the topic. These remarks occurred just a few hours prior to Governor Bob Ferguson's address. approved a state budget This encompasses contentious new levies on affluent individuals, small enterprises, digital service providers, development firms, and major companies.

Senate Democratic leaders proposed these tax measures to tackle a multibillion-dollar budget deficit and increase support for education, healthcare, and various public services.

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Ferguson characterized the tax increases as challenging yet essential for balancing the budget and supporting vital services. He mentioned that his team intends to continue collaborating with lawmakers and local businesses regarding this matter.

Earlier during the luncheon, Smith stated that he thinks Ferguson will "reintroduce economic development" as a priority for the state, and conveyed his optimism about this. Joe Nguyen , the head of the state Department of Commerce, a previous state senator with experience working at Microsoft.

For the past 12 years, economic development hasn’t been on the radar in Olympia," Smith stated, noting this period coincides with former Governor Jay Inslee’s term. "It seems to have vanished.

“Let’s get up,” Smith stated, earning applause. “We really should wake up.”

Smith was interviewed onstage by a tech entrepreneur and investor. Jonathan Sposato , Seattle Magazine owner and publisher, and chairman, who raised the issue by asking Smith about Microsoft’s role in Washington’s innovation ecosystem.

Smith pointed to data underscoring the sector’s significance, noting that tech accounts for 9.4% of all jobs and 22.1% of total compensation paid in the state — the highest such share in the country. He credited past public investments, particularly in the University of Washington and STEM education, for helping the industry thrive, but warned that momentum is slipping.

"This sector serves as the backbone of economic growth in Washington State, and we must keep that in mind," he stated. In comparison to his observations on a national and international scale, people in WashingtonState tend to underestimate the importance of this industry, he noted.

The benchmarking report unveiled during the event, produced jointly by the Technology Alliance with Accenture and the University of Washington, mirrored these apprehensions. The study revealed that although Washington excels in private sector research and development as well as higher education in science, technology, engineering, and math, it lags behind comparable states when it comes to fundamental student skills and startup acquisitions, which could pose threats to the region’s future competitive edge.

"Regrettably, even at the state and federal levels, some individuals still doubt the importance of an innovation-driven economy and the necessity for public funding to bolster and improve it," stated the Technology Alliance CEO. Laura Ruderman , a previous state legislator, in her remarks at the gathering.

"We all need to improve our ability to tell this story, whether within or beyond our state," she stated.

For the lawmakers present, Smith recognized the challenges they face in their positions—“a crucial role that admittedly causes more distress than satisfaction on numerous days”—but he encouraged them to focus on ensuring long-term economic health rather than quick revenue solutions.

However, as other states and nations provide incentives to lure technology sector employment opportunities, he pointed out that Washington has allowed economic development to slip from the focus of its policies.

Smith contrasted Washington’s approach with what he’s seen elsewhere, saying that in states like New Jersey, Virginia, and even North Dakota, policymakers are actively courting the tech sector with incentive packages and investment hubs.

He cited New Jersey’s $250 million effort to build 10 innovation centers — one of which includes a Microsoft-backed AI hub in Princeton — as an example of the kind of strategic planning Washington has lacked in recent years.

“Everywhere I go, people are saying, we have a new economic incentive plan,” he said. “This is happening around the world, except in Washington state.”

Nguyen, the Commerce director, echoed the call for urgency and clarity in how Washington supports innovation.

We express desires for innovation—but then we bind it with extensive bureaucratic restrictions," he stated, encouraging a move away from a "complexity-centric culture" towards one emphasizing rapid execution, responsibility, and tangible outcomes.

Smith pointed to Microsoft’s Redmond campus as a visible reminder of its impact on the region, saying each building represents jobs. He said that future growth will depend on whether Washington offers a supportive environment for economic development.

He did not address Microsoft’s recently announced layoffs This will affect approximately 6,000 employees worldwide, with almost 2,000 from the Washington state branch. According to the company, these reductions aim to enhance operational efficiency, minimize managerial hierarchies, and boost the flexibility of their team units.

Microsoft has not publicly linked the layoffs to AI efficiencies.

There wasn’t time to get to every audience question during the Q&A, but one that was visible on the screen as the event ended raised the bigger issue about the future of the economy: “Are these the first AI layoffs?”

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