The Washington state legislature is looking at reviving two expired high-tech research-and development tax breaks — minus the previous exemptions for advanced computing and some electronic device technology.
The previous research-and-development tax break law, which expired Jan. 1, 2015, covered advanced computing, advanced materials, biotechnology, electronic device technology and environmental technology
The new bill by House Majority Leader Pat Sullivan, D-Covington, would revive those tax breaks solely for research in the life sciences, medical devices and environmental technology. Sullivan was not at a Friday hearing of the House Finance Committee to explain why advanced computing and non-medical electronic research are not parts of his bill.
Finance Committee member Rep. Matt Manweller, R-Ellensburg, is a cosponsor of the bipartisan bill. He said his rationale for supporting removal of advanced computing is that corporations such as Microsoft don’t need those particular tax breaks.
One of the proposed revived exemptions would be on business-and-occupation taxes— a tax on gross receipts — if the research-and development investments exceed. 0.92 percent of the company’s taxable gross receipts.
The second proposed-to-revived exemption is on sales taxes for materials used for “meaningful construction” of research-and-development buildings that begins within five years of a person or company applying for that deferment. The maximum allowed in deferred sales taxes would be $1 million.
A 2013 law ordered that all new and extended tax breaks must be accompanied by studies showing whether jobs are gained or lost by any tax exemption. That information is to be used in calculating whether to extend or eliminate those exemptions in the future. Sullivan’s bill’s tax breaks would expire in 2026, and such a study would be used in the decision whether to extend them.
“This is critical to the life sciences industry in this state. We’re not trying to compete with Boston and the Bay area. But we need a baseline of incentives to be competitive,” said Marc Cummings, vice president of Life Sciences Washington, which used to be known as the Washington Biotechnology and Biomedical Association.
Research-and-development efforts “can spend their money on hiring employees or spend their money on paying taxes,” said Tom Ranken, president of the Clean Technology Alliance, which represents about 330 companies.
A Washington Department of Commerce handout at Friday’s hearing showed that this state had two life sciences tax breaks from 2003 to 2013. During the same time, Washington’s life sciences jobs grew by 2.63 percent.
During the same period, California had six life sciences tax breaks and watched its employment in that field grow by 18.25 percent. From 2003 to 2013, Florida had seven such tax breaks and saw its life sciences jobs grow by 8.42 percent.
The Massachusetts figures for 2003 to 2013 were seven tax exemptions and 15.21 percent job growth in life sciences. North Carolina’s numbers were seven tax breaks and 19.71 percent growth in life sciences jobs. And Texas had six life sciences tax breaks and a 15.61 percent job growth in that sector.
