Article by Erik Smith. Published on Wednesday, October 07, 2010 EST.
Company Opposes Ballot Measure Favored by Founder’s Father – Among Lengthy List of Business Opponents
Bill Gates, Sr. touts I-1098 at a July news conference in Olympia.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Oct. 6.—Microsoft is taking sides in the battle over a Washington-state income tax, and it ain’t the side of Gates.
The giant software company is aligning itself with the Defeat 1098 campaign – despite the fact that the measure’s most prominent public spokesman and biggest individual contributor is Bill Gates, Sr., father of Microsoft founder Bill Gates.
Microsoft is among a list of businesses and prominent business organizations opposing the measure that was released by the Defeat 1098 campaign Tuesday. The list demonstrates broad opposition to the measure within the state’s business community, and shows that with Microsoft on board, the bulk of the state’s high-tech enterprises are aligned with the No effort. Organizations that have emerged from the sidelines to oppose the measure include the Washington Technology Industry Association and the Washington Biotechnology and Biomedical Association. But the list is considerably broader than high-tech, also encompassing many of the state’s traditional bricks-and-mortar retailers, property companies and small businesses.
The initiative would impose an income tax for the first time in Washington state, targeting individuals reporting more than $200,000 in income each year. That hits at businesses registered as “S” corporations and other arrangements that require business income to be reported on personal income tax forms. Those businesses have already been taxed once through Washington’s business and occupations tax, a that serves much the same function as a corporate income tax. The new tax also would hit hard at business executives who receive stock options in lieu of salary, a common practice in the bustling high-tech industry in east King County.
“I think what’s interesting about today’s release is that it shows broad-based opposition to Initiative 1098, both from high-tech and traditional-economy businesses,” said Matt McIlwain of Madrona Venture Partners and a spokesman for the opposition campaign. “They know it’s bad for business and hurts their entire ecosystem.”
Hits Network of Small Businesses
What McIlwain means by the term “ecosystem” is the network of small businesses on which all large businesses rely. Amazon is a perfect example, he explained. The giant Internet retailer of books, DVDs and other merchandise does about 30 percent of its business through Amazon Marketplace partners. That network of small retailers supplements Amazon’s own lineup with their own inventory of new and used merchandise.
Likewise, Microsoft depends on smaller software developers and other entrepreneurs as it develops new products for market. McIlwain said, “That’s why they’re all coming out and saying that it’s not just going to be tough for us but for all the other businesses we depend on.”
Microsoft Opposition is New Development
The formal opposition from Microsoft is something new. Two weeks ago a $100,000 donation to the opposition campaign from Microsoft CEO Steve Ballmer was widely reported, but it was widely perceived as a personal donation, rather than an expression of opposition from the company itself. The I-1098 campaign moved quickly to respond, issuing a statement of support from the junior Gates.
But Wednesday’s release demonstrates that the company Gates founded takes a fundamentally different view. In the statement, Brad Smith, general counsel and senior vice president of legal and corporate affairs for Microsoft, said:
“As an employer, we’re concerned that I-1098 would make it harder to attract talent and create additional jobs in Washington state. We strongly support public education, but we’re concerned by key details in I-1098. This initiative would give Washington one of the top five highest state income tax rates in the country. I-1098 would apply this tax rate to all income, including capital gains and dividends, and would not permit any deductions for charitable contributions.”
State’s Most Influential Business Groups Opposed
The list released Wednesday includes the state’s largest business organizations, including the Association of Washington Business, the Washington Roundtable, the National Federation of Independent Business, the Association of General Contractors, the Washington Auto Dealers Association and the Washington Retail Association. It also includes most of the state’s chambers of commerce.
A spokesman for the I-1098 campaign could not be reached Wednesday. In the past, the campaign has countered business arguments by pointing out that it has the support of the Main Street Alliance, a group of about 2,000 business owners that was formed last year to support national health care reform legislation, and which has close ties to the Washington Community Action Network.
The I-1098 campaign is getting most of its financial support from public-employee labor unions and from wealthy individuals like Gates, who has contributed $500,000 of his own money to the campaign. It has raised about $5.2 million. Biggest contributor is the Service Employees International Union at $1.9 million. Supporters argue that the state needs an additional source of revenue to prevent further cuts to state programs. The tax would raise about $3 billion a year.
Meanwhile, the opposition campaign has much broader support. State Public Disclosure Commission records show more than 1,700 individual contributors of more than $25, for a total $4.5 million. The largest contribution is $100,000, and the average $2,500. The opposition campaign actually has a slight advantage going into the October showdown because the tax advocates had to spend about $1 million getting the measure on the ballot.
Employers that have contributed to Defeat 1098 and/or publicly stated their opposition to 1098
Aegis Living
Aeries Enterprises LLC
Alaska Airlines
All Purpose Batteries, Inc
Amazon.com
American Distributing Company
Arch Venture Partners
Archibald’s
Ashton Financial
Athens Plaza, LLC
Axio Research, LLC
Bartell Drugs
Bayview Limousine Service
Blue K Development LLC
Brenthaven
Bridges Rentals LLC
Calaway Trading, INC.
Calkins and Fredrickson Farms
Car Wash Enterprises, Inc (Brown Bear)
Carl J. Sanders Construction Inc.
Cassan Enterprises
Clise Properties, Inc.
Cobra Bec, Inc.
Concur Technologies
Cornell & Associates
Cornerstone Advisors
Cowles Company
Domex, Inc.
Drebick Investments, LLC
Dunn Lumber
Eastham Foster CPA’s
Elling Halvorson, Inc.
Embroidery Northwest
Expedia
EZ Pay Solutions LLC
Firdale Townhomes LLC
Forgery Sportsmedicine & Rehab
Foushee & Associates Co., INC.
George Deruyter & Son Daiery, LLC
GM Nameplate
Green Diamond Resources Company
Green Financial
Harnish Group Inc.
Hinotes Corner Storage, LLC
Horizon Distribution, INC.
Inrix, Inc
K-3 LLC
Kemper Holdings, LLC
Kiemle & Hagood Company
Kitsasp Auto Wrecking, INC.
Kvichak Marine Industries, Inc.
Lakeside Industries, Inc.
Lampson International, LLC
Law Office of Karl Zeiger
LeBeau Precision Aesthetics
Leonard Creative, Inc.
Lynden Incorporated
M Bloch & CO INC.
Maddock & Associates
Madrona Venture Group
Mailhandler Services Inc.
McCallum Print Group
McDougall & Sons, Inc.
McGregor Insurance Agency, Inc.
MEDSTAFF
Mercer Canyons Inc.
Merchants Acceptance Corp.
Microsoft
Mitchell Cottage Trust
Mobile Equipment Systems
Motricity
Murray Pacific Management
Neil Walter Company LLC
North Coast Electric Company
Northwest Racing Associates
Northwest Wholesale Incorporated
Northwestern Property Investment Co.
Oarlock Farms
Olsen Brothers, LLC
Olympic Management Co.
Osborne Construction Co.
PAC PAPER, INC.
PACCAR INC.
Pacific Investment Co.
Port Blakely Tree Farms LP
Potlatch
Precision FNC Services LLC
Propel Insurance
Puget Sound Pipe and Supply
Pull A Part
R.E. Powell Distribution Co.
Rainbow Sweepers, Inc
Rainier Welding
Reliable Transfer & Storage Co.
Richland RV Park, LLC
Ritzville Warehouse Co.
Roach Law Offices, LLP
Russell Investments
Sabey Corporation
Safeco Insurance Companies
Saltchuk
Schermer Construction, Inc.
Seattle Home Show Inc.
Sea-West, LLC
Seven Sisters Inc.
Shorenstein Realty Services LP
Simpson Investment Company
Sound Collections Co.
Star Rentals
Steve Burnstead Construction LLC
Stimson Lumber Company
Telect
The Boeing Company
The Garrigan Lyman Group
Titus-Will Enterprises, Inc.
Touchstone Corporation
Vaagen Bros. Lumber, Inc.
Valeo Consulting Group, Inc.
Wescott & Associates
Weyerhaeuser
Wickkiser International Companies, Inc.
Windermere Services Company
Windward Real Estate Services, Inc
Wright Development Co.
Yellow Rose Apartments, LLC
Business Organizations Opposing I-1098
Associated Builders & Contractors of Western Washington
Associated Builders and Contractors, Inland Pacific
Associated General Contractors of Washington
Association of Washington Business
Bellevue Chamber of Commerce
Bellingham Chamber of Commerce
Seattle Chamber of Commerce
Downtown Seattle Association
Building Industry Association of Washington
Columbia River Economic Development Board
Everett Chamber of Commerce
Evergreen Venture Capital Association
Federal Way Chamber of Commerce
Greater Spokane Incorporated
Greater Vancouver Chamber of Commerce
Identity Clark County
National Federation of Independent Business
Northwest Food Processors Association
Spokane Chamber of Commerce
Tacoma-Pierce County Chamber of Commerce
Tri-Cities Chamber of Commerce
Washington Biotechnology and Biomedical Association
Washington Farm Bureau
Washington Food Industry
Washington Restaurant Association
Washington Retail Association
Washington Roundtable
Washington State Auto Dealers Association
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