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News / Business

Aerospace incentives cut Boeing’s Washington taxes last year by $86 million

By Dominic Gates, The Seattle Times
Published: June 1, 2023, 7:38am

SEATTLE — Boeing paid “more than $200 million” in taxes to Washington state last year, the company said. It added that is $86 million less than it would have paid without the state incentives for aerospace manufacturing.

Using $200 million, that would be a 30% tax saving. The percentage savings will be lower than that but can’t be stated precisely because Boeing is not disclosing how much more than $200 million it paid.

Although legislators in 2020 eliminated the state’s major aerospace tax break at Boeing’s request in order to resolve a subsidy dispute with Airbus at the World Trade Organization, the jetmaker still reaps smaller but substantial tax savings from the remaining incentives.

The 2020 elimination of the reduced business and occupation, or B&O, tax rates on revenue slashed Boeing’s annual savings by about $100 million.

That’s the benefit Boeing derived from that single tax credit in 2018, the last year of normal production before the steep jet delivery drop that followed the 737 MAX crashes.

The vast majority of the remaining incentives are tax credits for “preproduction” development work on new airplanes and on property taxes.

In 2021, Boeing said it also paid “more than $200 million” in Washington state taxes while, according to filings with the state, the incentives cut Boeing’s tax bill by $112 million.

Boeing said the 2022 dip in its tax savings is because it got a higher property tax credit the previous year.

That was due to the property tax credit being carried over from 2020, when the COVID-19 pandemic greatly reduced jet deliveries and Boeing’s revenue so that it didn’t get the benefit of that credit in that year.

The elimination of the main incentive has greatly increased the taxes Boeing pays to the state.

Working backward from the company’s tax savings published each year by the state, it’s possible to calculate — for the years before the drop in deliveries — that Boeing paid only about $60 million in state B&O taxes in 2014; $19 million in 2015; $40 million in 2016; $27 million in 2017; $36 million in 2018; and just $4 million in 2019.

However, these figures do not reflect Boeing’s total state tax bills for those years. The company notes that it pays other state taxes besides the B&O tax, including local taxes, sales and use taxes, and property taxes.

Boeing declined to disclose the total amounts it paid in those years.

Touting another monetary contribution to the state’s economy, Boeing said it matches employee charitable giving to approved organizations, with the result that the company and employees together provide about $50 million annually to nonprofits in the state.

Boeing at the end of last year employed just over 60,200 people in Washington. It has continued to hire this year as it plans to raise production rates.