House Speaker Paul Ryan’s visit to the Boeing plant in Everett last week contained plenty of ideology, politicking, and lobbying for Republican efforts to reconfigure the U.S. tax code. But it was woefully short on facts — a situation that should play a role in the upcoming congressional discussion about how much American corporations pay to the government.
“For Boeing, we are taxing this business, these planes, your jobs in this country at a much higher rate than our foreign competitors tax theirs,” said Ryan, R-Wis. “You know what the tax rate here is? Thirty-five percent. I’m just in awe that in spite of all that, you’re still doing so well.”
The awe actually should be over Ryan’s selective use of facts. As Danny Westneat of The Seattle Times reported: “Not only is Boeing gushing cash, but its own financial documents show it has actually paid an average federal income tax of just 3.2 percent of profits over the past 15 years. That’s less than one-tenth the figure Ryan cited.” Westneat also quoted Matt Gardner of the Institute on Taxation and Economic Policy as saying, “The question with Boeing isn’t whether high taxes are hurting them, because that’s ludicrous on the face of it.”
Republicans, led by President Donald Trump, have taken aim upon the United States’ allegedly exorbitant corporate tax rate, turning it into a trope that requires more examination than they are willing to provide. According to NPR fact-checkers, the U.S. corporate tax rate of 35 percent is, indeed, the highest among industrialized nations. But because of a broad swath of loopholes and tax breaks, few American companies pay that percentage. American corporations typically pay taxes at a rate of 18.6 percent — lower than the rate found in Argentina, Japan, and the United Kingdom.
As Gardner told The Seattle Times: “Corporate profits are gangbusters right now. Corporate taxes as a share of the economy are, in the past 10 years, as low as they’ve ever been.” One study of 258 profitable Fortune 500 companies found that 18 of them have paid no corporate taxes over the past eight years, despite profits of $177 billion.
Boeing, one of the 10 largest manufacturing companies in the United States in terms of revenue, has become symbolic of how corporations lobby for lower tax rates in order to boost profits and benefit stockholders. In 2013, the Legislature approved a 16-year tax break expected to save the company $8.7 billion in exchange for assembling the 777X in the state.
Almost immediately, Boeing began shedding other jobs from its Washington operations, adhering to the letter of the law if not the spirit. Since then, the company has removed more than 12,000 jobs from its workforce in the state, but in 2015 and 2016, the tax breaks saved the company a total of $547 million in state taxes. Meanwhile, Boeing’s stock prices have increased 50 percent this year.
Boeing remains the largest private employer in Washington and provides numerous benefits to the economy. In addition to its facilities, it supports hundreds of suppliers throughout the state that help make the Northwest a hub of the high-tech aerospace industry. And while Boeing is essential to the Washington economy, it is incongruous for Ryan to point to the company while making the case that corporate taxes are harming U.S. businesses.
Republicans want to reduce the corporate tax rate from 35 percent to 20 percent. In pursuing that goal, congressional leaders should employ facts rather than misleading rhetoric.