In a recent opinion piece, Mark Harmsworth of the Washington Policy Center defended the federal tax deductions claimed by Microsoft and Amazon, emphasizing that these deductions are lawful provisions of federal tax law and that the companies’ continued presence in Washington supports the state’s economy.
Legal deductions, not tax evasion
Harmsworth responded to a Seattle Times column that highlighted Washington’s top ranking for corporate tax breaks, citing Microsoft’s $18.7 billion and Amazon’s $17.4 billion reductions in federal income tax. He described the column’s framing as “pure political theater,” arguing that the deductions are not illegal avoidance but lawful credits and deductions available to any profitable American corporation.
Washington’s tax structure
Washington does not have a corporate income tax. Instead, the state relies on the Business and Occupation (B&O) tax, property taxes, and sales taxes to fund public services. Harmsworth noted that both Microsoft and Amazon contribute heavily to these revenue streams. The B&O tax is levied on gross revenue, meaning the companies’ sizable sales generate substantial payments to the state.
Economic impact of the tech giants
According to the opinion piece, Amazon alone has invested more than $400 billion in Washington since 2010, covering payroll, infrastructure, and other capital expenditures. The companies together employ tens of thousands of Washingtonians and generate billions in state and local tax revenue. Harmsworth argued that the real question is whether the economic return from these tax preferences exceeds their fiscal cost, a calculation that must include jobs, wages, investment, B&O taxes, property taxes, sales taxes, and broader spillover activity.
Comparative perspective
Harmsworth pointed out that Washington ranks 45th out of 50 states in business tax competitiveness, according to the Tax Foundation. He warned that policies that demonize successful companies could encourage capital flight, noting that high‑earning individuals and entrepreneurs have already begun relocating in response to new capital‑gains tax experiments in other states.
Policy implications
The Washington Policy Center has long advocated for a competitive tax and regulatory environment that retains both large corporations and small businesses. Harmsworth concluded that focusing on the headline federal tax benefits while ignoring the employment, investment, and multiplier effects of these companies is an invitation to mediocrity. He urged policymakers and citizens who care about working families to prioritize keeping the engines of growth operating, rather than wishing them away.
Original reporting: Clark County Today (Vancouver WA) — read the source article.
