The Wall Street Journal covered an open letter to the governor from high tech leaders in Washington state warning of the damaging consequences that would come from the proposed new income tax. Predicted is a coming talent and entrepreneur flight from Washington state unless lawmakers and/or the governor change direction on the state income tax (both the new and the capital gains income tax).
Here is the text of the letter:
Governor Ferguson,
As experts and innovators in the field of artificial intelligence, we write to strongly encourage you to pause the state’s efforts to create a state income tax and increase the capital gains tax. These policies would materially undermine Washington’s ability to keep growing the tech sector, which is a core driver of our economy, and would slow the AI innovation and investment momentum that we should be accelerating, not discouraging.
Washington state is competing for the talent required to build and scale AI products, companies, and jobs. Although we already have an initial base of AI labs, startups, and innovators here, Washington is starting to lose momentum, slowing our ability to attract and scale this critical economic sector.
According to Silicon Valley Bank’s February 2026 State of the Markets report, Seattle has seen a significant downturn in startup formation in the last three years. The areas that are growing have one of two advantages.
- San Francisco is seeing growth in the AI sector due to a strong, existing ecosystem that Seattle cannot match.
- Texas is seeing growth due to a better tax climate that is attracting businesses in many sectors.
Washington state has a core of technology companies that could attract talent if the business climate is more favorable than California. An unfavorable tax climate with an income tax and capital gains taxes prevents Washington from building the ecosystem necessary to attract talent.
Washington would be left with the worst of both worlds – an AI ecosystem that can’t match California’s and high taxes that prevent us from attracting the talent to create that innovation core needed for the next wave of growth and job creation.
We strongly encourage you to pause both the income tax and capital gains tax bills and take the time to think about how we can be a national leader in the AI driven economy, which will be one of the most important new economic sectors of the next decade.
AI is at a critical moment, and a hasty decision now would do serious damage to the future of Washington’s innovation economy.
We are happy to answer any questions you might have about these issues.
Pedro Domingos
Professor Emeritus of Computer Science & Engineering at the University of Washington
Brian Hall
Former VP at Microsoft, AWS, and Google
Oren Etzioni
Founding CEO, Allen Institute for Artificial Intelligence
Luis Vargas, PhD
Founder, Evolver & former V.P of AI at Microsoft
David Shim
Co-Founder and CEO, Read AI
Manish Kedia
Co-founder and CEO, CloudMoyo Inc
Aviel Ginzburg
General Partner at Founders' Co-op
Cameron Etezadi
CTO LaunchDarkly
Aaron Goldfeder
CEO AZX
Paul Brown
SalesForce VP Software Engineering
Adam Wray
Managing Director AI, Data & Infrastructure, AJW Services
Vijay Boyapati
Software engineer and author
The letter comes just after Amazon announced a freeze in a downtown Seattle expansion and Microsoft announced they were suspending indefinitely the largest private construction project in the state.
The proposed income tax flies in the face of the clear language of the state constitution, but advocates are pushing it through both legislative bodies in hopes the Washington State Supreme Court takes up the case, reverses 100 years of precedent and re-interprets the plain language of the constitution like a page out of Orwell's Animal Farm.
