Citing Income Tax Initiative, Texas Governor Reaches Out to Washington Businesses

November 01, 2010

Tomorrow is Election Day, which means we'll find out whether Washington voters are keen on dropping off the list of states with no income tax. (Check out our report on Washington's Initiative 1098 here.) Given how much Washington trumpets its no-income-tax status to businesses considering investing and moving there, lots of people agree with our assessment that adopting an income tax, particularly on high-earners only, would have a devastating impact on the state's business tax climate.

Enter Texas Governor Rick Perry (R):

Perry, a Republican, has taken an unusually aggressive swipe at Gov. Chris Gregoire, a Democrat. Perry sent letters Friday to 90 leading businesses in Washington - including Amazon, Microsoft and Starbucks - inviting them to relocate to Texas, which also has no income tax.

"If Washington doesn't want your business, Texas does," said Perry. "Texas has no personal income tax and no interest in getting one."

Most Washington business leaders are lined up against the proposal, which would impose a 5 percent tax on individuals earning $200,000 or more a year and a 9% tax on those making more than $500,000.

Microsoft founder Bill Gates, the state's most prominent billionaire, has divided loyalties: his company is fighting the tax proposal on behalf of its many highly-paid workers, but the ballot initiative was sponsored by Gates father, a retired lawyer who argues that Washington needs the money to fund education. The software mogul himself has not taken a position on the tax, which stands to cost him tens of millions of dollars a year.

Perry reportedly sent the letter to 88 business executives in Washington.

More on Washington state here.

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