When Washington’s state research tax credit expired at the end of 2014, it felt as if renewal was just around the corner. After all, with more and more pressure from other nations offering better tax shelters and lower labor costs, “brain drain” was, is and will be one of the biggest obstacles to growth across a wide spectrum of industries. Lawmakers released the state budget on Monday and the credit was simply gone.
Though as early as January, Governor Jay Inslee fought to save the credit with an alternative budget he proposed, it was still a mere fraction of what taxpayers would have been able to receive in the historic iteration of the credit. First, the credit was limited to companies working on advanced computing, advanced materials, biotechnology, electronic device technology and environmental technology. The bigger issue was that in its previous form, the credit provided relief of up to $2M per company per year. In the governor’s draft, this amount was decreased to $500,000.
This is a troubling turn of events in Washington. Though proponents say they will fight to reinstate the credit, Washington has already sent the message that it may not be favorable for companies to keep operations in the state and definitely removed any incentive for companies that were eyeing the credit as a factor for making a move into it. That being said, there are 40+ states that currently offer a similar incentive which only further darkens the cloud hanging over Washington. Hopefully, this decision is reversed soon, but for now, it seems some companies are just out of luck!
Source: BizJournals
