Washington state would play a stronger hand in competing with Silicon Valley and other high-tech hot spots in attracting entrepreneurs who launch companies and create jobs, under a bill approved overwhelmingly today by a House committee.
“This is a smart and focused tool to help fledgling businesses thrive and expand their workforce,” Rep. Cyrus Habib of Kirkland said after the Technology and Economic Development Committee approved the tax-relief measure, which Habib sponsored. “It provides a compelling reason for entrepreneurs to invest in our state and its future.”
House Bill 1693 grants a $1 million annual business-tax deduction to certain start-up ventures in their first three years of operation. The proposal is tailored for the high-tech and manufacturing industries. The state’s business and occupation tax falls especially heavily on new and smaller ventures, and the bill is designed to help Washington vie for 21st-century companies with states where the tax system is more favorable for start-ups.
In a speech last week on increasing employment in the state, Gov. Inslee cited Habib’s bill as the kind of fresh, creative approach Washington needs. Inslee has included the bill in the economic policy blueprint on the governor’s official state web site.
Business group representatives, local government officials and individual entrepreneurs spoke in favor of the bill at the committee hearing Tuesday.
“Providing this form of tax relief for new businesses in high-growth sectors will help our area’s technology and knowledge-economy jobs base, and help make our area competitive with other parts of the country,” Bellevue Mayor Conrad Lee told the committee. “This bill will be just the encouragement a start-up business needs.
“This is a good investment, it’s the right investment, and in the years to come, we will reap fruits,” Lee said. “We will establish this area in the long run – as well as other parts of the state – as a worthy rival to other parts of the country.”
The measure incorporates accountability in the program, requiring state-agency reports on the effectiveness of the tax break in stimulating employment.
The bill likely will move to a tax-related committee of the House for further review.