by Paul W. Taylor, Washington State Standard
February 6, 2026
Microsoft President Brad Smith says affordability is now “the single most important political issue” in the United States and a central lens for Washington lawmakers weighing housing, taxes and infrastructure demands tied to data centers and artificial intelligence.
Smith said Microsoft tracks five affordability issues — housing, health care, grocery and child care costs, electricity and education — and argued the company has “a direct connection” to housing, electricity and education.
On housing, he said the shortage will not ease without higher annual construction of new homes, adding that “any year where we had more than 55,000, the problem got better,” while “every year we’re less than 55,000, the problem got worse.” He said private capital must be energized through land availability, permitting speed and cost reductions because “the public sector and others will never be able to do enough” on their own.
On taxes, Smith told “Inside Olympia” host Austin Jenkins that Microsoft is engaged but not endorsing or opposing the governor-backed 9.9% income tax proposal for annual incomes over $1 million, arguing lawmakers should focus less on whether a tax rises and more on “how it’s constructed,” including whether other taxes fall.
He warned Washington is entering a period in which it could rank among the highest-tax states across multiple categories at once. Washington’s capital gains tax now reaches a top marginal rate of 9.9% on gains above $1 million. Smith also pointed to the state’s estate tax, which now ranges up to 35%, the highest top rate in the country.
Smith also described Microsoft’s emerging approach to data centers as a community compact. “What we said is we will pay our own way so that our data center does not increase the cost of electricity for the region or for the neighbors,” he said, while also pledging water replenishment and greater transparency. On energy, he said the U.S. must return to growth in electricity production, “at least 25% every decade,” and that nuclear power is “part of the present and the future,” including small modular reactors.
On the tech sector, Smith called Washington “the most tech-dependent state in the nation,” noting that 22% of statewide payroll depends on tech. He said layoffs reflect pandemic-era overhiring and a shift in the tech industry’s center of gravity toward San Francisco, where AI startups are concentrated. That dynamic, he said, can make Puget Sound feel like “an appendage” when companies reallocate spending.
On AI, Smith said the technology will have “an ongoing and even profound impact on jobs” over the next “two to three decades, not two to three years.” He said it will create and displace jobs and change how even software engineers work, increasing the value of generalists who can adapt. “People who can learn, people who can adapt, people who can use AI are gonna be a lot better than those who are not,” he said, adding that he is “not giving up on people.”
This article was first published by TVW, a media nonprofit that provides comprehensive coverage of state government. TVW broadcasts unedited gavel-to-gavel coverage on statewide cable and at tvw.org, and produces original current affairs and education shows, including “Inside Olympia” and “The Impact”. TVW’s mission is to give Washingtonians access to their state government, increase civic access and engagement, and foster an informed citizenry.
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