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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

February 5, 2013 at 5:18 PM

Telco chooses Seattle over California for climate, taxes

A privately held telecommunications company today announced that it has relocated to Seattle from the Los Angeles area, in part because of the higher taxes it faced in California.

Flowroute is a 6-year-old company that provides wholesale voice over Internet protocol (VoIP) services. It claims to route more than 2 billion minutes of calls a year for its business customers.

The company has 17 employees and plans to add about 10 more by the end of the year.

The company relocated from Irvine, Calif., to Seattle because of Seattle’s tech community, business climate and less burdensome taxes, according to Chief Executive Bayan Towfiq.

“The biggest tax incentive for our move was California’s high income tax rates, now at 13.3 percent for the highest tax bracket,” he said via email.

Flowroute is a profitable limited liability company without outside funding. Because of its structure, “Flowroute’s profits would be subject to state income taxes in California, but not in Washington,” he said.

“Plus, the direction in which Seattle is headed economically, only up, makes it an attractive place to be. We’re excited to be part of that growth.”

Today, the company announced that it has set up its headquarters in downtown Seattle, at 1221 Second Ave., and hired a handful of new employees. Among them is Ron Rice, a former tech executive and Microsoft staff attorney, who is now Flowroute’s chief legal officer and executive vice president.

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