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Boeing's Tax Incentives Spark Controversy

  • Jan 8, 2015 | Gail Cole

 Over Washington State.

The European Union has filed a complaint with the World Trade Organization over Washington State’s tax incentives for Boeing. According to the EU, the state is violating international trade rules by providing the aerospace company billions in tax breaks.

The complaint specifically calls out a deal that the Chicago Tribune called “an incentive package on rocket fuel.” Boeing wanted the moon and let it be known that it would leave Washington unless it got it. Eager to please, and safeguard the manufacturing of the new 777X, Washington Governor Jay Inslee delivered. New and extended exemptions for the aerospace industry took effect in July 2014.

The EU and the United States have long battled over aviation. Since 2004, the EU has repeatedly “challenged various US Federal, State and local subsidies benefitting Boeing.” It argues they cause Airbus “to lose sales campaigns.” Read the European Commission’s memo, EU requests WTO consultations on extension of State of Washington subsidies to Boeing 777X, for additional background and details.

The United States and Boeing have consistently fought such complaints and launched a few of their own. Regarding the recent bout of allegations, general counsel for the Office of the U.S. Trade Representative Tim Reif said they “lack any foundation.” And Boeing issued a statement reminding that the tax breaks “are available to all aerospace companies, including Airbus and its suppliers” (WSJ).

The irony

Washington and Boeing are coming under fire for an incentive package that didn't accomplish all state officials hoped it would. The tax breaks secured a Boeing presence in Washington but not the entire production of the new 777X. In October, Boeing announced that it would expand its operations in Missouri, where it will build parts of the 777X and F-22. At that time, at least $3.4 billion in state and local tax breaks were identified. It is unclear exactly how much Boeing will ultimately receive in exchange for hundreds of new jobs in technology, research and development, and service and support. For now, at least, the Missouri tax breaks aren't part of the EU complaints.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.