Giving up tax breaks to help kids

The tech industry has a new role in Washington state — as the poster child for education reform.

But if the industry truly wants to improve schools, it should give up some of its tax breaks and ask the state to invest that money in education instead.

I saw previews of a new public-private lobbying partnership last week at business luncheons featuring Gov. Christine Gregoire and Microsoft's chief lawyer, Brad Smith.

Both argued that the state's leadership in technology is threatened by its underfunded and inadequate education system.

"We need to focus not only on quantity but on quality so that we have the kind of world-class education and research system that will keep this area competitive throughout the 21st century," Smith told the Greater Seattle Chamber of Commerce.

You'll be hearing this a lot in coming months, along with references to overseas competition and globalization guru Thomas Friedman. Gregoire, Smith and others have spent two years on an education and workforce plan that's shifting into high gear.

It's a good time to focus on education, now that big road projects are generally moving forward and the budget is under control.

Next month you'll hear about a chamber retreat on education. In November, a state task force will present a plan for improving the system, from preschool through graduate research.

I think it's great that Microsoft is using its clout to push for something that benefits the entire state.

Like most people around here, I'm also grateful for the support Microsoft, employees and founders have given to area schools.

But the company should take it a step further and help the state with funding, as well.

Specifically, Microsoft and other tech companies should ask the state to reconsider the generous tax incentives they get.

Under a program created to boost job creation during the mid-1990s, tech companies pay no sales tax on buildings and equipment used for R&D. They also get business & occupation tax credits for R&D costs, including wages.

Initially the sales tax was deferred, giving companies a break while they got a product started. It became an exemption in 1995.

This began as a 10-year program to jump-start the industry, but last year the Legislature and Gregoire made it permanent.

About 500 companies take advantage of the breaks, which are expected to cost the state $259.2 million over the next two years. Microsoft alone could save $90 million in sales taxes on its current campus expansion project.

Why not give companies the break for just a year or two? That preserves the incentive for startups and companies moving to the state.

This would give schools a fraction of what they need, but it's a start. It would also give credence to the industry's position, and raise the bar for other business interests.

If we're lucky, it could start a chain reaction.

Instead of demanding an extra $1.8 billion to bury the Alaskan Way viaduct, downtown developers may decide the money would be better spent on an endowment for Seattle's near-bankrupt schools.

Boeing might pitch in to prepare students to build the next generation of airplane components here, instead of in Japan and China.

I'm getting carried away.

But if Microsoft can afford to give shareholders nearly $100 billion through dividends and stock buybacks, it can afford to pay sales tax like most everyone else.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com.