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In Our View: Disclosure Valuable

Law that sheds light on state tax breaks to firms such as Boeing important tool

The Columbian
Published:

The interpretation of disclosures about state tax breaks for Boeing and other corporations is open to debate. But the benefits of having those disclosures available to taxpayers and lawmakers are indisputable.

In 2015, Boeing received tax breaks and credits that carved $305 million off its invoice from the state of Washington. That is the result of tax breaks that were extended and expanded during an emergency session of the Legislature in late 2013, when lawmakers devised a plan expected to save Boeing a total of $8.7 billion off its taxes through 2040. In exchange, the company agreed to build the 777X at its Everett plant, after threatening to woo other states in search of the best possible bargain.

The virtue of corporate tax breaks is debatable. But first we must applaud lawmakers for ensuring that the actual impact of those breaks is illuminated. Earlier in 2013, lawmakers passed a law that, for the first time, requires businesses to disclose their savings from state-offered corporate welfare. Those disclosures became available in late April, and columnist Danny Westneat of The Seattle Times calculated that the various breaks trimmed Boeing’s state tax bill for last year by 93 percent.

In one regard, this can be viewed as an investment by the people of Washington. Boeing produced more planes than expected; invested billions of dollars in a new 777X plant in Everett, a 737 facility in Renton, and a customer delivery center in Seattle; and continued to provide thousands of good-paying jobs as the state’s largest employer.

That fits in with the narrative of tax breaks for corporations creating jobs and providing an economic boost with tentacles that reach throughout the state. Not only does Boeing employ roughly 80,000 people in Washington, but it attracts related industries that form an essential sector of the state’s economy. For a century now, Boeing has contributed to a zeitgeist that marks Washington as a place of innovative and groundbreaking industry.

On the other hand, following the passage of the tax breaks, Boeing wasted little time violating the spirit of the deal, if not the letter. While building the 777X in Washington, the company has moved more than 5,000 jobs to lower-paying states over the past two years. While the tax breaks approved by lawmakers in 2013 can be justified, those same lawmakers failed in providing too much of a carrot and not enough of a stick in its largesse for Boeing.

The game of corporate tax breaks is one that has companies pitting states against one another in search of the best deal, and McClatchy news service reported last year, “Boeing is playing the subsidy game at all levels of government.” As The New York Times reported in 2012: “States, counties, and cities are giving up more than $80 billion each year to companies. … They rarely track how many jobs are created.”

They also rarely know exactly how much companies are benefiting from those tax breaks. Therein lies the importance of Washington’s new disclosure law. State Sen. Reuven Carlyle, D-Seattle, who pushed for law, told The Seattle Times last month that, “We all feel frustration with short-term layoffs” but that landing the 777X in the state “makes that package worthwhile.”

That is one opinion, but at least it is one that now has some facts behind it rather than speculation and conjecture. Quantifying the tax savings provided by corporate welfare will be essential for lawmakers and taxpayers in assessing such deals both now and in the future.

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