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Opening the books on Boeing’s taxes & investment in Washington

April 29, 2016

boeing bill.jpg

Does a tax break work?  Does it provide a compelling return on investment for taxpayers?  The public now has a new level of visibility to decide for themselves.  In my view, today we are able to learn first hand with hard data that the deal Washington taxpayers struck with The Boeing Company is, in fact, a win-win.

One of the driving passions of my work in the Legislature has been the powerful idea that the public has a right to know the value of a tax preference for companies, organizations and industries so they can more effectively and objectively determine the return on investment themselves.  The legislation I crafted as chair of the House Finance Committee has transformed the accountability, transparency and analysis of tax preferences and in many cases opened the books for the public.  Following the legislation’s passage, the public activism for open data and transparency by the Seattle Times played a key role as well in pushing and prodding for comprehensive disclosure.

As an architect of the Boeing tax and investment package, I’m proud of the fact that today Boeing proactively met the spirit of the law as well as the letter and opened the books of their tax preferences.  They did so in a comprehensive, responsible fashion that provides broad context to allow the public to measure the effectiveness of the tax preferences granted by the Legislature in both 2003 and 2013.

Boeing received in 2015 tax preferences valued at $305 million.  That number–previously hidden from public view– should be analyzed in the context of the overall $13 billion investment in our state including wages, supplier payments, capital investments, state and local taxes paid, community giving, tuition waivers for employees and more.

Washington is the global center of innovation in the aerospace sector.  In 2003 we represented about 32% of Boeing global workforce.  Today, we represent about 49% of their global workforce at more than 79,000 employees.  While that is down slightly from 2013, it is up dramatically since 2003 as we continue to grow as the anchor of Boeing’s workforce.

I worked hard with our team strongly behind accountability to negotiate solid accountability provisions in the Boeing package.  We proposed formal job requirements, levels, clawback provisions, inclusion of engineers in the package and much more.  We did pass key provisions to secure the future of carbon fiber in our state and those elements will help our state for generations.  Many of the other accountability provisions did not survive the final cut, and I regret the Legislature’s failure in that area.  I hope the company and machinists and engineers and others can continue to build bridges to protect the jobs of tomorrow.  Yet, I stand by the overall package as a compelling return on investment for the taxpayer of Washington as we march into the 21st Century of aerospace with the 777x and carbon fiber as the material of tomorrow.

I learned and grew a great deal during the Boeing tax negotiations.  The special session was personally difficult and politically fraught, and yet we found a pathway forward.  The idea that we can come into special session and pass a major tax package without more due diligence, process and transparency itself remains frustrating.  It was a flawed process that did not serve the public as well as a longer, more thoughtful effort could have.  But in the end, our state moves forward, learns and adapts to the economy of tomorrow.

In my view, we are a great state in part because of the enormous economic powerhouse of our aerospace sector.  Today’s public data is just more hard, objective evidence that respects the intelligence of the public and allows them to judge for themselves.

Your partner in service,

Reuven.

 

 

 

 

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2 Comments leave one →
  1. eugene lipitz permalink
    April 30, 2016 7:10 am

    Reuven, do you know JQ Adams fight with congress over the prohibition on receiving abolitionist petitions? He humiliated the congressional opponents who tried to censure him for speaking truth.

    A fitting finale for one of the greatest Americans.

    Gene Lipitz

  2. Jonathan Mark permalink
    May 30, 2016 7:05 am

    Thanks for the blog post. I would like to offer my objections to this line of thinking:

    Let’s say hypothetically that granting Boeing a tax break creates a net increase in business activity in our state. To me this suggests that government revenue should also increase in order to service the increased demand for transportation, schools, and other government services. Certainly it would be unwise to create a net reduction in government revenue.

    Since supply-side tax cuts have never paid for themselves in the history of the universe, the responsible policy choice would have been to legislate a revenue increase at the same time as the Boeing tax break, perhaps raising taxes on small businesses or consumers. Of course this would not have looked good politically, causing everyone to conclude (I hope) that legislators should not be in the business of handing out tax favors to companies.

    But of course there was no revenue increase, the money was grabbed and the consequences were left to be dealt with in the future (as we are today). Worse yet, Sen. Carlyle engineered the tax break knowing that Olympia was in the control of conservatives who have sold their base on the idea that no one’s taxes have to be increased, ever, and therefore any revenue increases would be a heavy lift in the foreseeable future.

    I optimistically think Washington progressives are learning to keep a close eye on our Democratic elected officials, because when the back room deal goes down, they may turn coat and do so much damage in one action that it negates a whole career of do-gooding. If we are so learning, the 2013 Boeing tax break was a big learning experience. I think it would be wise to acknowledge that it was a mistake.

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