Joni
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Washington (state) Gives Boeing Tax Break

Wed Jun 11, 2003 5:24 pm


The State of Washington has offered "incentives" to Boeing if they choose to build the 7E7 there. These are estimated to amount to USD 400M over the next six years and up to USD 3.2B over 20 years.

That sounds like an awful lot of money, expecially if we consider also that according to independent research Boeing is overcharging USD 2-3B on the tanker lease deal (at least at one point this figure was quoted in Reuters). I don't mean for this to be inflammatory, but one thing I know for certain is that if there was data floating around that Airbus was getting 5-6B in subsidies, half of this board would be screaming bloody murder.

http://biz.yahoo.com/ap/030611/na_fin_us_boeing_washington_state_2.html
 
VonRichtofen
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RE: Washington (state) Gives Boeing Tax Break

Wed Jun 11, 2003 5:52 pm

3.......2........1....
 
FLY777UAL
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RE: Washington (state) Gives Boeing Tax Break

Wed Jun 11, 2003 6:42 pm

Sounds like a lot of money, yeah, but think of just how many jobs the new line will support--

power companies, phone companies, construction companies, etc., not to mention the other economic benefits of having such a huge manufacturer...

F L Y 7 7 7 U A L
 
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RayChuang
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RE: Washington (state) Gives Boeing Tax Break

Wed Jun 11, 2003 10:27 pm

With those incentives in place, I think Boeing will choose the Everett, WA assembly line to build the 7E7. We're talking about an airplane that could sell well over 1,000 copies, and that will finally make use of the huge production facility, which has been underutilized lately due to the general slowdown in airplane production, the non-startup of the second 777 production line and the drawdown of 747 production. The fact that the assembly plant is very close to the Port of Everett, which means large assemblies can be brought into the plant easily, helps too.  Smile
 
luv2fly
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RE: Washington (state) Gives Boeing Tax Break

Wed Jun 11, 2003 11:21 pm

I said all along that Boeing was going after bids from other states for the 7E7 line as a negotiating tactic and to get tax benefits and such. Yeah if they get that super sweet deal they will locate the line there, tho Washington state and California will move heaven and earth to keep this in there state.
You can cut the irony with a knife
 
Greg
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 5:02 am

It's a simple matter of economics. Without a state personal tax, Washington desperately needs Boeings franchise taxes, etc. to fill the coffers each year.

It would be dumb of them to do anything that would put that in even the slightest jeopardy of losing any of their business.

Also, they are still feeling the 'sting' of the corporate move. And the critics who felt that more should have been done to keep them in Seattle.
 
elwood64151
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 5:37 am

Money, money, money!
Must be funny
In a rich man's world!

Enough ABBA for now...  Smile

This is a good example of government tax incentives to attract/keep major employers. It's usually done on the local/county level, though states are frequently involved. Things like "Enterprise Zones" in cities like Chicago, Atlanta, and Kansas City have allowed businesses to move in while hardly paying any local taxes at all. Otherwise, these businesses would a) move into the suburbs, in the case of retail outlets and manufacturing facilities, or b) move to other cities/states in the case of corporate offices.

I hope we can avoid an AvB debate, and I don't know if this will end up in an AvB debate in *this* thread, but I'm sure someone's filing it away to bring up the "subsidies" Boeing gets. Just remember, it's the *State* of Washington, not the capital city of the US and thereby the US government, please.
Those who fail to learn history are doomed to repeat it in summer school.
 
brons2
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 5:45 am

That sounds like an awful lot of money, expecially if we consider also that according to independent research Boeing is overcharging USD 2-3B on the tanker lease deal (at least at one point this figure was quoted in Reuters). I don't mean for this to be inflammatory, but one thing I know for certain is that if there was data floating around that Airbus was getting 5-6B in subsidies, half of this board would be screaming bloody murder.

I disagree, if Airbus were to move a production facility from Toulouse to Milan (for example) due to lower local taxes, I wouldn't see anything wrong with that. It's all about finding the lowest cost production facility.

It's a simple matter of economics. Without a state personal tax, Washington desperately needs Boeings franchise taxes, etc. to fill the coffers each year.

Not to mention the workers that pay state sales taxes on their purchases. I don't know much about the franchise tax though.

Overall, these tax abatements to Boeing will have a net positive effect versus the cost of losing the plant altogether.
Firings, if well done, are good for employee morale.
 
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RayChuang
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 10:13 am

Folks,

Let's consider why Airbus chose Toulouse and Hamburg for their final assembly lines.

Look at the location of Toulouse and Hamburg on a map of Europe--note Toulouse is close to a major shipping port (not to mention it has been historically home to the French aerospace industry since before World War II), and Hamburg a major shipping port for Germany. As such, large components for Airbus airliners can be easily brought in by boat in addition to Airbus' in-house fleet of A300-600ST transports with oversized cargo carriage.

Boeing chose to build its its widebody airliner factory at Paine Field because it was very close to the Port of Everett, and even had a railroad line (one of the steepest in the USA in regular use) built from the port up the hill to Paine Field. This allows Boeing to have large subassemblies shipped in by boat, notably the Japanese-built subassemblies for the 767, 747-400 and 777 airliners. Given that the 7E7 will use the same Japanese subcontractors to build subassemblies for the plane, it would be easiest for Boeing to build the plane at Everett, especially now with so much unused production capacity available and with Boeing's stated goal of using even large subassemblies for the plane.  Smile
 
Joni
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 5:25 pm


Brons2,

What about if France decided it was going to offer Airbus a "friendlier" corporate tax rate?

 
elwood64151
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 11:35 pm

Joni:

We're not talking about the *Federal* Government of the United States. We're talking about the *State* Government of the State of Washington. This is less like France offering Airbus a tax break to stay in France than it is like Toulouse offering Airbus a tax break to not move to Hamburg.
Those who fail to learn history are doomed to repeat it in summer school.
 
N79969
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 11:38 pm

France is a far more centralized than the US. Big difference in systems of governance.
 
captaingomes
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RE: Washington (state) Gives Boeing Tax Break

Thu Jun 12, 2003 11:47 pm

It all works out the same. $5 billion or whatever saved from one form of government to another ends up being the same as subsidies, or no-interest loans. The A vs. B debate is silly on both ends to be honest, but I really don't think either side can claim the other is getting a free ride.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
Joni
Topic Author
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RE: Washington (state) Gives Boeing Tax Break

Fri Jun 13, 2003 5:04 pm


I don't think it makes any difference if Boeing saves taxes paid to the state or federal government. Besides, you could also compare the state of Washington to France and the US to the Eurozone in this case.
 
ScottB
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RE: Washington (state) Gives Boeing Tax Break

Fri Jun 13, 2003 11:24 pm

Exactly how much in taxes (excluding payroll taxes) does Airbus pay to France, Germany, or the Eurozone?

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