Dear Members of the Washington State Senate,

We appreciate the efforts of the Legislature to foster a strong and vibrant economy in Washington state. Over the past several decades, Washington has benefited from the growth of the technology sector and our state’s rising status as a global technology hub. Today, the tech sector is a leading driver of job creation and economic growth, employing more than 410,000 Washingtonians with well-paying jobs. This all begins with startups, which are the foundational pillar of this innovation ecosystem.

Recognizing the importance of startups to Washington’s economy, we wanted to draw your attention to the harmful impacts of SB 5096 on Washington’s startups, entrepreneurs, broader innovation ecosystem, and competitiveness as a technology hub.
 
Capital Gains Tax Hurts Startup Employees and Ecosystem
 
This bill comes at a time when Washington’s startups already face a challenging market as their consumer and business customers struggle with the headwinds from the risk-averse economic climate created by the global pandemic. A capital gains tax would penalize founders and their employees during an already unprecedented period.
 
Notably, the bill impacts startup employees at an outsize rate. Income for employees at startups is often substantially lower than mature technology companies due to limited capital in the early years as the business begins to develop a product, customer base, and revenue. Founders’ shares and stock options are a primary compensation strategy used as a way to encourage those early-stage employees to forgo higher wage jobs at established companies and take the risk for working at a startup. Realized capital gains on founders’ shares and stock options are already taxed at the federal level. Taxing those gains penalizes employees and encourages founders to form their companies in other states, or to relocate to states that do not have a capital gains tax. The result will be a loss of jobs and economic vitality in our region.
 
Further, a state capital tax may spur investors to cash out of already existing investments in our businesses and reappropriate this capital into startups outside of Washington, or into investments that do not create jobs for our state. By shrinking the available capital, this bill would slow the engine that has created most of the economic growth, innovation, and job creation in our state over the past few decades.
 
Capital Gains Tax Adversely Impacts Washington’s Competitiveness
 
The vitality of Washington’s innovation economy is at an inflection point. Tech companies and their employees in Silicon Valley are relocating to states with more favorable business climates. Meanwhile, the pandemic has made virtual work environments the norm, which has allowed companies to recruit and retain talent far away from their headquarters. Washington is in a position to gain from this. Our state has a large pool of talent, companies consider our region favorable when compared to the Valley, and our stature internationally has grown in the past decade.
 
At the same time, the cost of living is rising in our state and many legislators are making national headlines vilifying our industry. This makes Washington less competitive each year. A capital gains tax would remove a meaningful attraction and retention mechanism and will harm our competitiveness even more.
 
Strengthening Washington’s Startup Ecosystem
 
We welcome the efforts of the Legislature to advance education programs that grow our talent pool, create startup programs that make it easier for underrepresented groups to launch a company, and genuinely engage in a public-private collaboration to build a strong economy. However, SB 5096 places a burden on entrepreneurs and job creators while weakening Washington’s innovation ecosystem – a key driver of job creation and growth for our state’s economy, not just for today, but for the future.

We encourage Members of the Legislature to vote NO on SB 5096, and we welcome the opportunity to discuss measures to grow the startup landscape and innovation economy in Washington.
 
Sincerely,

Acumatica - Jon Roskill, CEO
AdaptiLab - James Wu, CEO
Aditi Consulting - Raja Narayana, CEO
Advocat Technologies - Pradnya Desh, CEO
Aerostrat - Elliot Margul, CEO and Co-Founder
Agile Systems - Allan Beals, Founder and CEOAgility Design - Dan Blase, President
AirGO.Ai  - Jeff Zika, CEO
Airwavz.tv - Bonnie Beeman, CEO and Founder
Ampd - Joshua Gebhardt, CEO & Co-founder
Apptio - Sunny Gupta, CEO
Asha AI - Rashmi Joshi, CEO & Founder
Asignio, Inc. - Kyle Rutherford, Founder & CEO
AstrumU - Adam Wray, CEO & Founder, Kaj Pedersen, CTO
Avara Construction - Benjamin Petter, President
Avept, Inc. - Stanton Maines, Co-Founder & Vice President
BirchAI - Kevin Terrell, CEO
BitTitan - Barney Silver, Vice President
Capital Planning LLC - Michael Miller, CEO
Care Papers, Inc. - Carl Rogers, CEO
Code Fellows - Jeff Malek, CEO
CodeSmart, Inc. - Mark W Meyer, President
CoreStack - Ezhilarasan (Ez) Natarajan, Founder & CEO
Covenantz - Pericles DeAvila, CEO
Daily Magic Mobile Inc - Marianna Vallejo, CEO
Dataweave Inc. - KrishnanThyagarajan, President
DKParker LLC - Dave Parker, Founder & Managing Partner
Dolly - Mike Howell, CEO
Donuts, Inc. - Akram Atallah, CEO
doxo - Steve Shivers, CEO & Co-Founder
dToor -Christina Cyr, CEO
Easy Metrics, Inc. - Dean Dorcas, CEO
Echodyne - Eben Frankenberg, CEO & Co-Founder
Edizeven - Shilpi Gupta, Founder & CEO
efelle creative - Fred Lebhart, CEO
Electric Pen - John Pletsch, President
Enlyft - Lokesh Dave, CEO
Esper.io - Yadhu Gopalan, CEO & Co-Founder
ExtraHop - Jesse Rothstein, Raja Mukerji, Co-Founders
FanWide Technologies Inc. - Symon Perriman, CEO & Founder
FileOnQ, Inc. - Kim Webley, CEO
Flowplay - Derrick Morton, CEO
Flyhomes - Andrey Nokhrin, Growth Manager
Formotus, Inc. - Adriana Neagu, President/Co-founder
Forms On Fire - Kendall Kunz, Founder & CEO
FreeGren Digital - Dan Sundgren, Co-Founder
FreeMo - Leigh Hunt, CEO & Founder
Freshworks - Pradeep Rathinam, CCO
GitClear - Bill Harding, CEO
Goldfinch Partners - William L. McNichols, Sean R. Collins, Managing Partners
H5 Group LLC - Tony Hancuff, President
i8 Labs - Kouji Kodera,  ceo & co-founder
Indigo Slate, Inc. - Aaron Duggal, Co-Founder & Managing Partner
Industrial Software Solutions - Glenn Carlson, President & Founder
Innov8.ag - Steve Mantle, Founder & CEO
Integrated Register Systems, inc. - Arnold Mortzheim, CPA, President
iSpot.tv - Sean Muller, Founder & CEO
Jag Journey, LLC - Sharon Couts, CEO
Keepe - Rishi Mathew, Co-founder & CEO
Komaya - Rosalinda Saxena, Co-founder
Kurvv - Ryan Lee, CEO & Co-founder
LendMe, Inc. - Amanuail Ambaye, Founder & CEO
MacroHealth - Virgil Bretz, Co-Founder & CEO
Magick.ai, Inc - Brian Mellinger, President and CEO
McObject - Steven Graves, President & co-founder
MediaPRO -Mike Metzger, CEO
MedVenture App - Emily Cheng, CEO & Co-Founder
Metrolla - Alexandra Reynolds, CMO & Co-founder
Modern Electron - Tony Pan, Cofounder & CEO
Modex, Inc. - Dale Larson, CEO
Moment - Marc Barros, CEO
MoxiWorks - York Baur, CEO
Mystery - Shane Kovalsky, Co-founder, CEO
Navnetics, Inc. - Estelle Giraud, CEO
Neal Analytics LLC - Dylan Dias, CEO
neu - Claude Mbemba, Kwame Boler, Co-founders
Nintex - Eric Johnson, CEO
Nori - Paul Gambill, CEO & Co-Founder
Northwest Tank & Environmental Services, Inc - Remy Cano, CEO
Odysseus Technologies, Inc. - Dr. Bryan E. Laubscher, Founder & CEO
OfferUp Inc. - Nick Huzar, CEO
Optio3 Inc. - Sridhar Chandrashekar, Cofounder, CEO
PDM Automotive - Johannes Crepon, CEO
Plateau Software, Inc. - Brad Kleinfelder, Founder
Point Inside - Jon Croy, CEO
Precision Image Analysis - Mary Waiss, Founder
Pro.com - Dean Falconer, Founder
Pulse Labs - Abhishek Suthan, CEO
Pure Watercraft - Andy Rebele, Founder & CEO
Red Bison Advisory Group LLC - Martha Bejar, Co-Founder, Bill Owens, Executive Chairman
Resonance AI - Randa Minkarah, Co-founder & COO
RevelHMI - Robin Elenga, Founder & President
Revolution Agriculture - Richard Brion, Founder & CEO
Rooster Park - Scott Ruthfield, Founder & CEO
rThreat Inc - Hugo Sanchez, CEO - Cofounder
Sappington Co.  - Tim Goggin, CEO
Satchl - Cody Myers, Co-Founder & CEO
Sea-Level Operations - Rex Frank, CEO
Sensoria Health Inc. - Maurizio Macagno, CTO and Co-Founder
Sound Biologics - Wei Yan, CEO
SportsTrace - Max Montrey, Co-Founder & CEO
Strix Leviathan - Jesse Proudman, CEO
Swift HR Solutions, Inc. - Shannon Swift, Founder/CEO
TalkSocket - Andrew DeLorenzo, Co-Founder & CEO
Teal Communications - Michael Johnston, Co-Founder & CBO
Temporal Technologies - Maxim Fateev, Co-Founder/CEO
Terraclear - Brent Frei, CEO
Test Innovators - Edan Shahar, CEO
Thriva - Catherine Crandall, CEO
Turnstone - Scott Lee, CEO
Unaffiliated - Mark Mader
Uplevel - Joe Levy, CEO
Upstart Group - Sue Sanford, Co-founder and CEO
Validar Inc - Victor Kippes, CEO
Velosys, LLC - Chris Wade, CEO
Virtual Therapeutics Corporation - Dan Elenbaas, Founder & CEO
Web42 - Heather Kendall, Co-Founder / CEO
WideNet Consulting Group - David Tang, President & Co-Founder
With Hope - Don Hernandez, Founder and CEO
Wrench, Inc. - Edward Petersen, Co-Founder & CEO
YourBase - Yves Junqueira, Co-Founder & CEO
Zipwhip - John Lauer, CEO

*We keep this list as up to date as possible. If you sign outside of business hours, note that there may be a delay in adding your name to the list.