What Boeing Wants
- Sales Tax News
- Dec 17, 2013 | Gail Cole
Washington State has tried to make Boeing happy. In November, Governor Jay Inslee (D) postponed an international trip, called a special session, and signed legislation specifically for Boeing. It extended and expanded tax credits, incentives and exemptions, created funds for worker education and training, and more. Yet when the Boeing machinists rejected the proposed labor contract, Boeing let it be known that it would move operations for 777X if it were offered a deal it couldn’t resist.
The Chicago Tribune called “the request for proposal on Boeing’s 777X” an “incentive package on rocket fuel.”
Among other things, Boeing reportedly wants:
- Free or discounted land and facilities;
- Local government to pay for any needed infrastructure improvements;
- Money to hire and train new employees;
- Breaks on corporate income tax;
- Breaks on franchise and property taxes;
- Breaks on sales and use tax;
- Breaks on business licenses, gross receipts tax, and excise taxes
- Breaks on any other tax a state might consider; and
- No delays in the permitting process.
In exchange, Boeing promises the creation of 8,500 jobs by 2024.
54 sites are being considered as the new home for the 777X, and “the pitches have come from California to the Carolinas, Alabama to Utah, Texas to Kansas.” Missouri has aggressively pursued Boeing; and although the new home for the 777X is still unknown, the company said recently it will add between 300 and 400 research jobs in St. Louis over the next 2 years.
Boeing spokesman Doug Alder Jr. says the company is “just trying to cut the best deal” so it can remain competitive. That may be true. But some wonder why “hard-pressed taxpayers are being asked to provide a free site, build a free factory, finance all infrastructure for the plant, train workers for the plant, buy equipment for the plant and pretty much surrender all tax revenue that the plant might generate. This, to benefit a company that projects a profit of $6.7 billion in 2013 and whose stock price has soared 77 percent in the past year” (ajc.com).
It is common for states to offer incentives to companies that can promise lots of jobs. Consider what states have done for Amazon.com: Tennessee delayed Amazon’s sales tax collection obligation for 2.5 years; Indiana delayed it for two years; and Nevada delayed it for more than 1.5 years. In Florida, where counties have been vying for Amazon’s presence, there have been promises to waive property taxes and provide other tax abatements.
States like Washington and Illinois know very well that companies can and do move their operations to more favorable locations. Boeing—displeased with the way things were going in Washington--moved its headquarters to Chicago in 2001.Hartney Fuel Oil Company set up offices in small towns, which allowed the company to pay less sales tax.