Legislators wanting to exercise their new taxing authority by boosting tech taxes should first read an important commentary in today’s Seattle Times by Susan Sigl and Bryan Mistele. Sigl, head of the Washington Technology Industry Association, and Mistele, founder and CEO of INRIX, remind policymakers of the economic importance of the industry to the state and the importance of responsible tax policy.

In the mid-1990s, to nurture a young tech sector, lawmakers passed tax incentives to spur investment and job creation. As the op-ed reports,

…these incentive programs that have paid off dramatically in jobs, economic activity and tax revenues.

Results from the incentive programs have been spectacular. Our economy has been transformed, with tech now the state’s major economic driver. The Washington Research Council reports that technology-related employment increased 119 percent over the past two decades, while the underlying state economy grew only 14 percent.

Tech leaders emphasize the continued importance of maintaining the existing programs and of channeling tax revenues to improved education, including STEM and access to post-secondary education. Sigl and Mistele note the competitive environment.

Other states have funds dedicated to capitalizing promising startups, generously subsidize research and development, and offer more-aggressive tax incentives.

For example, Maryland is considering boosting its R&D credit with support of the Manufacturers Alliance and state Chamber of Commerce. Most states offer similar programs.

Also this week, Microsoft’s senior director of state government affairs, writes about the importance of incentives and education investments to tech development.

The incentives that are in now in place have worked exactly as they were designed to, and have proven to be prudent investments for the taxpayer, paying substantial dividends in the form of new jobs and incremental tax revenues that far exceed their costs.

To learn more about tax policy and the economic impact of the tech industry, I recommend two of our recent reports, Leveling the Playing Field with Tax Preferences and Washington’s Prosperity Depends on Vibrant Tech Sector.