A coalition of prominent artificial intelligence experts, startup founders, and technology executives is urging Washington Governor Bob Ferguson to pause proposed income and capital gains tax increases, warning that the policies could significantly damage Washington’s competitiveness in the rapidly evolving AI economy.
In a letter sent to the governor, the group argues that expanding the state’s capital gains tax and pursuing a state income tax would “materially undermine Washington’s ability to keep growing the tech sector,” which they describe as a core driver of the state’s economy. At a time when artificial intelligence is reshaping global industries, they say Washington should be accelerating innovation and investment—not discouraging it.
A fragile moment for Washington’s startup ecosystem
The letter comes amid massive pushback against proposals to implement a statewide income tax and expand Washington’s capital gains tax to include qualified small business stock—equity commonly held by startup founders, early employees, and angel investors. Critics argue that such changes would alter the risk-reward equation that underpins early-stage investing.
In recent public discussions, industry leaders have warned that startup founders and investors are more mobile than ever. “Have investors left already? Absolutely. Because they can,” one tech leader said in a radio interview addressing the proposals. Others have noted that even relatively modest tax changes can shift decisions about where to build, invest, or relocate before a company exits.
The signatories’ letter reflects that broader concern. Washington, they argue, is competing nationally—and globally—for AI talent and capital. While the state has an established base of major technology companies, research institutions, and AI labs, its startup momentum has slowed.
Seattle losing ground
Citing Silicon Valley Bank’s February 2026 State of the Markets report, the letter notes that Seattle has experienced a significant downturn in startup formation over the past three years. Meanwhile, growth is concentrating in regions with distinct advantages.
San Francisco, the letter argues, has reasserted itself as the central hub for AI innovation due to the density of its ecosystem—founders, venture capital, research institutions, and experienced operators all in close proximity. Texas, by contrast, is attracting business growth across sectors in part due to what the authors describe as a more favorable tax climate.
Washington, they warn, risks falling between those two models.
“Washington would be left with the worst of both worlds,” the letter states—unable to match California’s AI density while simultaneously adopting higher taxes that reduce its ability to attract and retain top talent.
The stakes for AI leadership
Artificial intelligence is widely viewed as one of the most economically transformative sectors of the coming decade. From healthcare and logistics to cybersecurity and enterprise software, AI-driven companies are attracting record investment and reshaping job markets.
The signatories argue that Washington still has the foundational assets to compete: global technology companies, world-class universities, experienced engineers, and an entrepreneurial base. But they contend that policy choices made now will determine whether the state builds the innovation core needed for the next wave of growth and job creation.
The letter is signed by a broad cross-section of Washington’s AI and technology leadership, including Pedro Domingos, Professor Emeritus of Computer Science & Engineering at the University of Washington; Brian Hall, former Vice President at Microsoft, AWS, and Google; Oren Etzioni, Founding CEO of the Allen Institute for Artificial Intelligence; Luis Vargas, PhD, Founder of Evolver and former Vice President of AI at Microsoft; David Shim, Co-Founder and CEO of Read AI; Manish Kedia, Co-founder and CEO of CloudMoyo; Aviel Ginzburg, General Partner at Founders’ Co-op; Cameron Etezadi, CTO of LaunchDarkly; Aaron Goldfeder, CEO of AZX; Paul Brown, Vice President of Software Engineering at Salesforce; Adam Wray, Managing Director of AI, Data & Infrastructure at AJW Services; and Vijay Boyapati, software engineer and author.
Together, they represent leaders spanning academia, early-stage startups, venture capital, and major technology enterprises.
Their message to the governor is clear: at a time when founders and capital are increasingly mobile and AI innovation is clustering in select regions, Washington’s tax policy could determine whether the state remains a hub of technological leadership—or watches the next generation of companies grow elsewhere.
