Boeing Gets Biggest State Subsidy in US HistoryTax Professionals' Resource
November 13, 2013 — 1,522 views
On the 11th of November 2013, Gov. Jay Inslee of Washington signed the largest government subsidy ever given to a single corporate firm. It is surprising that such a decision took only a few days to make, especially considering the large amount of money involved. This law is beneficial to Boeing because it allows the company to extend its operating tax dues over a fairly long period of time, until 2040 (27 years). The tax break value amounts up to $8.7 billion.
What the Tax Breaks Lead to
These tax breaks are a way to incentivize the aircraft manufacturer to continue with the development of the Boeing 777X model, an aircraft design that is rumored to make it the most efficient commercial airplane ever produced. The design is unique because of the massive wingspan made possible by the company’s breakthrough R&D and light-weight graphite-epoxy wing material.
It is said that the company was not completely satisfied by this generous legislation, and wanted large health benefits and pensions along with an 8 year-long contract. Gov. Inslee called a special session by the state legislature regarding the deal about a week ago. Though the legislation has been passed by the state House as well as the Senate, the airplane manufacturer has not yet committed to producing the 777X model in Washington.
Tracking Mega Deals
Good Jobs First executive director, Greg LeRoy, stated that the deal is noted because it is the largest package to ever be given out to a single firm ever. Good Jobs First is an organization that maintains records on such ‘mega deals’. According to the group, large organizations have been given over $64 billion in tax breaks since 1976. Giving out tax breaks of such large amounts to big corporations is a somewhat new technique in legislation.
How Such Incentives Help the State
These tax breaks work because the massive loan attracts large firms to certain states. Once the companies come into the states, they provide a great number of jobs to people in the area. Due to the additional employment created, states start earning more money through its citizens. With the extra inflow of income, there is an added amount of expenditure, leading to a multiplied effect in the economy. The process results in the state improving its current economic condition drastically. The larger the organization, the greater the number of jobs created.