Letter to the Legislature: Reinstate the R&D Tax Incentive Program

Dear Governor/Legislator:

Washington faces significant fiscal challenges over the next few years. As employer representatives, we understand the issues and also want to enhance a competitive business climate that creates additional job opportunities for the citizens of our state – and generates needed resources to build a better state. We believe that the public and private sectors working together can successfully tackle these issues.

Over the last two decades, the combined technology industries have become the primary driver of job growth in Washington. Today, more than one in four Washington jobs is directly or indirectly attributable to these industries, making them a key foundation to our state’s economic health. These companies provide high wage jobs in growing fields such as information technology, aerospace, biotechnology, health care, and clean energy. 

 F5 Networks – F5 Networks is the global leader in Application Delivery Networking. The company’s hardware, software, and virtual solutions help organizations address the relentless growth of voice, data, and video traffic to better support mobile workers and applications—in the data center, the network, and the cloud.   F5 was founded in 1996 and now is an S&P500 company that employs more than 3300 employees worldwide.   The R&D tax incentive programs helped the company over the past 15 years to hire critical employees. An R&D tax preference is essential to building a future IT industry in the state.

 

EMC/Isilon – Isilon Systems was founded in 2001 to provide data storage solutions for large scale content like pictures, videos and DNA sequences. It took an enormous amount of capital and nearly a decade of development before they had their first profitable year.  The R&D tax preferences were instrumental in allowing them to build the business and accelerate hiring so that they could bring solutions to market more rapidly.  In 2010 EMC, the global leader in data storage, acquired Isilon Systems.  They are still based in Seattle and continue to grow employing nearly 1,000 people in the State.    

 

Zillow – Zillow conducts “advanced computing” under Washington State law, which results in significant savings through the research and development tax incentive programs. This allows them to hire more people and focus on other ways to grow the business, which in turn helps the local economy. Zillow, like many companies, have been approached by other jurisdictions, from Nebraska to New York to Louisiana, with tax incentives to hire high-tech employees in their states. To stay competitive with other jurisdictions and for future company growth in Washington, the state needs to extend this tax incentive.

 

ZymoGenetics — Founded in 1981, ZymoGenetics is focused on the discovery, development, manufacturing and commercialization of therapeutic proteins. The R&D tax credit incentives enabled continued and future BMS investment locally in ZymoGenetics R&D personnel, capital projects, and importantly, the discovery, development and delivery of innovative medicines to help patients prevail over their serious diseases. In addition to their scientific contributions, the R&D tax credit was a key strategic business driver in the acquisition by Bristol-Myers Squibb in 2010 and decision to keep ZymoGenetics doors open & continue operations and expansion in Washington State.

 

These are just a few of the stories where the R&D incentives made a key difference in the economic prospects of important local employers, created new employment opportunities in our state, accelerated research investments and further advanced our global reputation as a destination for innovation.

 

In addition to these direct economic benefits, communities across Washington have been improved by the charitable contributions and volunteer efforts of the companies and employees of the innovation sector. There has been generous support of K-12 and higher education, scholarships, social services, environmental causes and the arts, which have made a significant difference in the lives of citizens across our state.

Other states and countries continue to view Washington’s strong technology sector with envy and aggressively recruit our firms to relocate or expand elsewhere. These governments often provide a wide variety of incentives that are unavailable in this state.  Reauthorization of the R&D incentives sends the right signal at the right time to one of the most vibrant sectors of our economy, securing their intent to grow and expand here in Washington State.

While budget pressures will surely be intense during the 2015 session, extension of these incentives is a prudent investment in the continued economic growth of our state. The best way to generate funding for public education and other critical government services is to grow the state economy. Reinstating these incentives will help retain and expand a critically important industry at this most crucial time.

 

We strongly encourage you to extend the R&D incentives for Washington state companies.

Sincerely,

Kris Johnson, President Association of Washington Business	Robert Bernardi Chair Clark County HTC	Tom Ranken, President & CEO CleanTech Alliance
Ernie Simas Chair East King County Chambers of Commerce	Suzanne Dale-Estey President & CEO EDC of Seattle & King County	Susannah Malarkey Executive Director Technology Alliance
Maud Daudon President & CEO Seattle Chamber of Commerce	Meg Weber Executive Director Technology Alliance Group NW	Chris Rivera President & CEO WBBA
Mayor John Marchione, Washingon Tech Cities Coalition	Michael Schutzler CEO WTIA