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nycbjr
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Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:26 pm

Didn't see this being discussed, if it is already lmk!

https://www.flightglobal.com/air-transp ... 33.article

Boeing has asked for its tax breaks to be suspended amid an acrimonious and escalating trade war between the USA and the European Union, targeting its respective aircraft manufacturers, that threatens to play long-term havoc on aircraft deliveries on both continents.


Personally I think this is a good move, maybe a sign things are changing for the better at Boeing?
 
kalvado
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:30 pm

with 737 MAX losses they are facing, it is a good time to do so - they wouldn't be paying much anyway.
 
ShamrockBoi330
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:38 pm

Just trying to avoid tariffs on EU sales of the MAX. Too little, too late or just in the nick of time? Would they have to repay past tax incentives for this to affect the WTO ruling? When are the WTO expected to announce against BA, May/June?
 
IADCA
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:43 pm

kalvado wrote:
with 737 MAX losses they are facing, it is a good time to do so - they wouldn't be paying much anyway.


Wouldn't be paying any, and they'll likely also have substantial losses this year, which will likely generate carry-forwards. This is just another strategic corporate move, not some shifting strategy based on any sense of morality.
 
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Revelation
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:43 pm

I think it shows the tariff approach is driving reforms in the market.

Boeing would rather give up a few hundred million in tax rebates get suspended rather than see billions of dollars of deliveries subject to large tariffs.

It'd be akin to what happened in other trade actions, it's a tacit admission that the tax is an un-allowed subsidy but would no longer be providing a benefit to Boeing so the point would be moot.

The Seattle Times article ( https://www.seattletimes.com/business/b ... n-tariffs/ ) points out the tax breaks could be reinstated if allowed by further EU-US negotiations.
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JerseyFlyer
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 5:54 pm

It's a big win for Washington State. They got the work from Boeing in exchange for the tax breaks, now they get the tax as well. I wonder if other states that were in competition for the work have any route for redress in this?
 
astuteman
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 6:21 pm

Revelation wrote:
I think it shows the tariff approach is driving reforms in the market.

Boeing would rather give up a few hundred million in tax rebates get suspended rather than see billions of dollars of deliveries subject to large tariffs.

It'd be akin to what happened in other trade actions, it's a tacit admission that the tax is an un-allowed subsidy but would no longer be providing a benefit to Boeing so the point would be moot.

The Seattle Times article ( https://www.seattletimes.com/business/b ... n-tariffs/ ) points out the tax breaks could be reinstated if allowed by further EU-US negotiations.


I think it is an opportunist move.
A blatant attempt to get one up on Airbus who have now had tariffs imposed on THEM, but adroitly sidestepping having tariffs applied to Boeing themselves.
Cracking piece of one-upmanship

As you say, for the price of $200m-£300m per year ($230m in 2018 according to the linked article) they get to avoid billions in tariffs.
But still reserve the right to have the benefits reinstated at a later date.

What this does not demonstrate is
a) anything remotely philanthropic
b) an attempt at reconciliation

Those behaviours are not in the lexicon of the Boeing Company of the last decade or so

Rgds
 
dtw2hyd
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 6:22 pm

What would be the 777X program cost to Boeing without Washington incentives?
All posts are just opinions.
 
planecane
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 6:27 pm

dtw2hyd wrote:
What would be the 777X program cost to Boeing without Washington incentives?


The same as they are now. The tax breaks are not subsidies. They improve the profitability as they pay less in taxes. However, if Boeing just up and moved the entire operation to another state they could pay the same (or less) in taxes than they do with the tax breaks. Granted, transplanting everything to a low tax state would cost a lot more than they would end up saving in taxes due to the size of the operation in Washington State.
 
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Revelation
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 6:40 pm

astuteman wrote:
What this does not demonstrate is
a) anything remotely philanthropic
b) an attempt at reconciliation

I ran my own business in the 90s and learned the last place to look for morals or altruism is in my fellow businessmen/women.

My then-neighbor drug dealers were more responsible and kindly than were the captains of industry I was dealing with.

I'm not a fan of that stuff, nor of the current 'might make right' era, but I've learned to not expect better.

Boeing nor Airbus simply were not going to release the governmental teat without a good reason to do so.

Also those governmental teats seemed to be accustomed to a good milking in exchange for various considerations.

Seems Boeing has made this move, wonder if Airbus responds in kind.
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mjoelnir
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 6:49 pm

Revelation wrote:
astuteman wrote:
What this does not demonstrate is
a) anything remotely philanthropic
b) an attempt at reconciliation

I ran my own business in the 90s and learned the last place to look for morals or altruism is in my fellow businessmen/women.

My then-neighbor drug dealers were more responsible and kindly than were the captains of industry I was dealing with.

I'm not a fan of that stuff, nor of the current 'might make right' era, but I've learned to not expect better.

Boeing nor Airbus simply were not going to release the governmental teat without a good reason to do so.

Also those governmental teats seemed to be accustomed to a good milking in exchange for various considerations.

Seems Boeing has made this move, wonder if Airbus responds in kind.


In both cases the WTO case is for past deeds, things already happened.
 
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ssteve
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:00 pm

kalvado wrote:
with 737 MAX losses they are facing, it is a good time to do so - they wouldn't be paying much anyway.


It is worth noting, though, that Washington B&O is a revenue tax.

The bills introduced Wednesday will remove the 40% B&O tax break for all aerospace companies beginning April 1. The legislation will push the tax rate up from the current .002904 of total revenue to the standard rate for all manufacturers of .00484 of total revenue.


So profitability doesn't matter. They owe it even if they claim a huge loss.
 
strfyr51
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:06 pm

ShamrockBoi330 wrote:
Just trying to avoid tariffs on EU sales of the MAX. Too little, too late or just in the nick of time? Would they have to repay past tax incentives for this to affect the WTO ruling? When are the WTO expected to announce against BA, May/June?

Boeing will have enough Tax Loss Carry forwards to see them through the next 10 years. They don't need tax breaks and won't need them into the next decade.
 
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zeke
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:07 pm

How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?
Last edited by zeke on Thu Feb 20, 2020 7:08 pm, edited 1 time in total.
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kalvado
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:08 pm

ssteve wrote:
kalvado wrote:
with 737 MAX losses they are facing, it is a good time to do so - they wouldn't be paying much anyway.


It is worth noting, though, that Washington B&O is a revenue tax.

The bills introduced Wednesday will remove the 40% B&O tax break for all aerospace companies beginning April 1. The legislation will push the tax rate up from the current .002904 of total revenue to the standard rate for all manufacturers of .00484 of total revenue.


So profitability doesn't matter. They owe it even if they claim a huge loss.

Question is if this is the only one - or there are more, since they are referred to as tax breakS, and some likely still based on profit.
 
MIflyer12
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:10 pm

kalvado wrote:
ssteve wrote:
kalvado wrote:
with 737 MAX losses they are facing, it is a good time to do so - they wouldn't be paying much anyway.


It is worth noting, though, that Washington B&O is a revenue tax.

The bills introduced Wednesday will remove the 40% B&O tax break for all aerospace companies beginning April 1. The legislation will push the tax rate up from the current .002904 of total revenue to the standard rate for all manufacturers of .00484 of total revenue.


So profitability doesn't matter. They owe it even if they claim a huge loss.

Question is if this is the only one - or there are more, since they are referred to as tax breakS, and some likely still based on profit.


If you want to do the research to claim which tax breaks are based on profit, and the value of those, please do. You got called out for your misunderstanding.
 
kalvado
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:12 pm

zeke wrote:
How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.
 
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Polot
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:15 pm

zeke wrote:
How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

It’s quite simple. Boeing asks their local state lawmakers to introduce a bill that kills the tax break. If there is someone else benefiting from the law they are free to get their local state lawmakers to argue against the proposed bill to try and get it killed in the state legislature.
 
kalvado
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:26 pm

MIflyer12 wrote:
kalvado wrote:
ssteve wrote:

It is worth noting, though, that Washington B&O is a revenue tax.



So profitability doesn't matter. They owe it even if they claim a huge loss.

Question is if this is the only one - or there are more, since they are referred to as tax breakS, and some likely still based on profit.


If you want to do the research to claim which tax breaks are based on profit, and the value of those, please do. You got called out for your misunderstanding.

I didn't say about profit tax; and I still see an easy way to do exactly what I said - cut taxation based on MAX losses.
Boeing got a huge B&O tax credit for setting up MAX and X production - that is easy to find. 40% B&O cut is just a beginning of the story.
With lots of losses going onto MAX program account, booking them as production setup related costs - or something along those lines - would again keep their tax obligations to a minimum. Q.E.D.
 
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par13del
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:35 pm

nycbjr wrote:
Didn't see this being discussed, if it is already lmk!

https://www.flightglobal.com/air-transp ... 33.article

Boeing has asked for its tax breaks to be suspended amid an acrimonious and escalating trade war between the USA and the European Union, targeting its respective aircraft manufacturers, that threatens to play long-term havoc on aircraft deliveries on both continents.


Personally I think this is a good move, maybe a sign things are changing for the better at Boeing?

Better at Boeing?
The USA Government may never give them RLI as it is not a funding method that they believe in, so Boeing and the USA authorities at both state and federal level had better come up with a replacement or the short term gain they get from the next round of WTO rulings will be long term pain.
 
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zeke
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:40 pm

kalvado wrote:
How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.


There would literally be hundreds of companies in WA in the aerospace sector, Panasonic, B/E Aerospace, Zodiac, Esterline Technologies, AIM Aerospace, Aviation Technical Services, Mitsubishi come to mind.
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mham001
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:41 pm

astuteman wrote:

I think it is an opportunist move.
A blatant attempt to get one up on Airbus who have now had tariffs imposed on THEM, but adroitly sidestepping having tariffs applied to Boeing themselves.
Cracking piece of one-upmanship

As you say, for the price of $200m-£300m per year ($230m in 2018 according to the linked article) they get to avoid billions in tariffs.
But still reserve the right to have the benefits reinstated at a later date.

What this does not demonstrate is
a) anything remotely philanthropic
b) an attempt at reconciliation

Those behaviours are not in the lexicon of the Boeing Company of the last decade or so

Rgds


Reconciliation with whom?
 
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par13del
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:42 pm

zeke wrote:
So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

The appropriate word is ASK, any business can ask for what they want, does not mean they will get it, especially if the state who passed the law want to avoid the semblance of playing favorites.
The states in the North West are well acquainted with the WTO and their various cases and rulings.
 
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Polot
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:44 pm

zeke wrote:
kalvado wrote:
How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.


There would literally be hundreds of companies in WA in the aerospace sector, Panasonic, B/E Aerospace, Zodiac, Esterline Technologies, AIM Aerospace, Aviation Technical Services, Mitsubishi come to mind.

Do they have any manufacturing in WA? (Legit question- I do not know). Having an office or warehouse in WA is not enough for the tax breaks.

par13del wrote:
zeke wrote:
So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

The appropriate word is ASK, any business can ask for what they want, does not mean they will get it, especially if the state who passed the law want to avoid the semblance of playing favorites.
The states in the North West are well acquainted with the WTO and their various cases and rulings.

It’s very hard to argue against this. The bill writers will argue that since Boeing is a primary local economic engine and major employer of their constituents that it is in WA’s best interest to get rid of the tax breaks since Boeing doesn’t want them, especially as it has minimal effect on other companies (since it is written so specifically...companies like Amazon and Microsoft are not getting this specific tax break the bill seeks to eliminate) and eliminating the tax break benefits Washingtonians as a whole because the state will get more revenue from taxes.

WTO rules based on complaints. How is the EU or anyone going to complain that they are unfairly suffering because Boeing is being forced to pay more taxes?
Last edited by Polot on Thu Feb 20, 2020 7:56 pm, edited 2 times in total.
 
strfyr51
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 7:50 pm

kalvado wrote:
zeke wrote:
How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.

and? Any tax breaks given to any Airbus or Mitsubishi or Anybody else can and probably will come into question..
 
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zkojq
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 8:19 pm

planecane wrote:
dtw2hyd wrote:
What would be the 777X program cost to Boeing without Washington incentives?


The same as they are now. The tax breaks are not subsidies.


I believe the WTO disagrees with you on that.
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planecane
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Re: Boeing asks for suspension of tax breaks

Thu Feb 20, 2020 8:38 pm

zkojq wrote:
planecane wrote:
dtw2hyd wrote:
What would be the 777X program cost to Boeing without Washington incentives?


The same as they are now. The tax breaks are not subsidies.


I believe the WTO disagrees with you on that.


I know they do but state/local tax breaks are very different than federal would be. In the US there is very wide variation from state to state and city to city in taxes. If Boeing had the exact same business in Texas they would pay less taxes. Washington giving them a break so that they are closer to Texas isn't a subsidy because they could pay less without special treatment in another City/State.
 
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Revelation
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 1:51 am

zeke wrote:
How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

Yes, they can ask, it's up to the state legislature to vote for or against.

zeke wrote:
kalvado wrote:
How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.


There would literally be hundreds of companies in WA in the aerospace sector, Panasonic, B/E Aerospace, Zodiac, Esterline Technologies, AIM Aerospace, Aviation Technical Services, Mitsubishi come to mind.

Yes, the Seattle Times piece indicates all of these firms are impacted.

It also says:

Lisa Brown, executive director of the state Department of Commerce, said that if the WTO were to authorize retaliatory tariffs against the U.S., “they can be administered on any product and there is a very real threat that tariffs could be imposed on agricultural products in Washington state.”

So the tax break enjoyed by aerospace may negatively impact other business concerns in the state.

I presume this is part of why passing this legislation is getting the fast track.
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JayinKitsap
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 2:19 am

Washington State legislature always want more revenue. Amazing the spending going on right now.
 
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william
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 2:30 am

strfyr51 wrote:
kalvado wrote:
zeke wrote:
How can Boeing ask this, one of the smarty replies that used to pop up on the subsidy threads was these tax breaks are enshrined in law and available to anyone in the state.

They would claim Airbus should just setup a factory in the state to get the same incentive.

So how can a single private company ask for a law to be changed which was supposed to be for the benefit of all manufacturers in the state ?

How many companies make commercial aircraft in the world? How many of those are located in WA state?
Since there is likely only one company - namely Boeing - doing "Manufacturing of Commercial Airplanes, Components, or Aerospace Tooling" in WA, their request for a change in law will be uncontested and get an easy pass in legislature.

and? Any tax breaks given to any Airbus or Mitsubishi or Anybody else can and probably will come into question..


Yes sir, I wonder what Alabama offered up.
 
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bikerthai
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 2:38 am

From what I understand, the tax insentives are not going away. It will be rewritten to meet WTO rules. So in theory Boeing may still take advantage of the new rule, but probably not as much as before.

And yes, the there are many local aerospace company with factories in and around the Puget Sound area. They all do significant work for Boeing, but many of the larger ones produce hardware for Airbus in the same facilities as well.

bt
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enzo011
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 6:09 am

Be careful what you wish for I guess. The US would not have initiated a case against Airbus if Boeing hadn't asked for it. Both were ruled against and the first finding was made against Airbus. Boeing was also found guilty and will have tariffs applied against them as well. This could have been avoided had the White House not imposed tariffs when they had the opportunity, but what's done is done.

Good luck trying to convince the EU and Airbus to let bygones be bygones and not negotiate payback for the tariffs imposed or a permanent seizing of tax breaks.

US targets Airbus as it raises import tariffs on EU aircraft

President Donald Trump's administration has announced it will raise the import tariff on EU aircraft from 10 to 15% in March.

It's mainly targeted at giant European plane manufacturer Airbus.

The 10% tariff was introduced back in October after the World Trade Organisation (WTO) ruled the US could legally impose tariffs worth €6.9 billion.


Funny how a grounding and the economical impact that has focuses your mind on your activities and makes you look for ways to save money. The last thing Boeing really wants is more financial road blocks in the coming years. If there was no MAX grounding this rethink would not have happened.
 
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bikerthai
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 2:30 pm

enzo011 wrote:
The last thing Boeing really wants is more financial road blocks in the coming years. If there was no MAX grounding this rethink would not have happened.


The MAX grounding may have accelerate the law by a few months, but this repeal of the law was decades in comming and will be the next to last chapter of the WTO dispute. The final chapter will be when Airbus and the EU address the WTO ruling against Airbus.

bt
Intelligent seeks knowledge. Enlightened seeks wisdom.
 
StarAC17
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Re: Boeing asks for suspension of tax breaks

Fri Feb 21, 2020 5:17 pm

ShamrockBoi330 wrote:
Just trying to avoid tariffs on EU sales of the MAX. Too little, too late or just in the nick of time? Would they have to repay past tax incentives for this to affect the WTO ruling? When are the WTO expected to announce against BA, May/June?


Not just the Max but all Boeing aircraft.
Even if no EU carrier is buying the max they are still buying the 777 and the 787 from Boeing.
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trex8
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 11:34 am

bikerthai wrote:
From what I understand, the tax insentives are not going away. It will be rewritten to meet WTO rules. So in theory Boeing may still take advantage of the new rule, but probably not as much as before.

And yes, the there are many local aerospace company with factories in and around the Puget Sound area. They all do significant work for Boeing, but many of the larger ones produce hardware for Airbus in the same facilities as well.

bt

They can’t rewrite a tax on revenue to be WTO compatible as a companies sales are directly related to the amount of product made/sold. That is always WTO illegal. You can provide all the infrastructure /property tax/r &d support you want as it isn’t necessarily directly related to whether you make any product ever or how much. EU RLI was only non compliant when interest rates were below commercial rates.
There is an article in the Tacoma Tribune that the legislation actually reintroduced the reduction in B & O taxes if the whole trade battle gets settled
https://www.thenewstribune.com/opinion/ ... 81021.html
 
leghorn
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 12:49 pm

The poster Washingtonflyer was all over the Bombardier CS100/CS300 tariffs topic but is keeping schtum/stumm here. I'm interested to hear this Poster's take on the machinations in Seattle.
 
frmrCapCadet
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 3:13 pm

I-5 needs a lot of rebuilding, 20 years overdue. State colleges are too expensive for most citizens. Housing in the prosperous parts of the state are too expensive, but housing in outlying areas need mass transit - which is expensive. Washington taxes are about as regressive as any in the US. Citizens generally oppose any changes in the system, except reducing car tab prices. Boeing wants mass transit to its factories and trained or highly educated workers. Airbus does not face any of these issues. (although Wales voted for Brexit - which may trigger some of the same problems in Wing-land)
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bikerthai
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 3:45 pm

frmrCapCadet wrote:
Boeing wants mass transit to its factories and trained or highly educated workers.


They are not going to get it. All the mass transit infrastructure is geared toward getting the suburb in to down town. This support Amazon, med-tech and now with the new spur to the east side: Microsoft.

The major Boeing facilies are no where near any commuter rail line. And will not be in any near for my generational future. They rely on busses.

bt
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Revelation
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 3:59 pm

enzo011 wrote:
Be careful what you wish for I guess. The US would not have initiated a case against Airbus if Boeing hadn't asked for it. Both were ruled against and the first finding was made against Airbus. Boeing was also found guilty and will have tariffs applied against them as well. This could have been avoided had the White House not imposed tariffs when they had the opportunity, but what's done is done.

I'm not sure I understand the situation.

Why didn't EU withdraw their offending subsidies before the WTO assigned damages to the US, just like Washington State is now doing?

To keep things simple, I'll quote CNN:

The World Trade Organization (WTO) ruled earlier that the United States could target goods from EU nations because the bloc had failed to comply with an earlier ruling regarding government subsidies for Airbus (EADSY).

Ref: https://www.cnn.com/2019/10/02/business ... index.html

And BBC:

US trade officials said the EU's settlement offer came years too late and did not resolve US concerns about ongoing subsidies. Imposing tariffs is intended to produce a better proposal, they added.

Ref: https://www.bbc.com/news/business-49906815

WTO could still sanction tariffs against the US, but their goal is to gain compliance, and the US is now moving towards doing that, whereas it seems EU is not.

Marketwatch says:

The panel found that the EU had failed to show that it had succeeded in withdrawing French, German, Spanish and British subsidies for the A380 superjumbo, or German and British subsidies for the A350XWB widebody jet.

https://www.marketwatch.com/story/eu-ha ... 2019-12-02

Why is there such inability to show that these subsidies have been withdrawn?

mjoelnir wrote:
In both cases the WTO case is for past deeds, things already happened.

The latest WTO ruling seems to be saying that EU has failed to show that it has withdrawn illegal subsidies for A380 and A50XWB.

While A380 is winding down it isn't completely wound down yet, and A350XWB clearly is ongoing.

Some of our a.net members suggest aerospace tax rebates for Boeing are a great deal and EU subsidies are a much worse for deal for Airbus, so maybe Boeing is doing everyone a favor by pushing to end the aerospace tax rebates and in turn forcing EU to show that whatever illegal subsidies for Airbus has ended.
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frmrCapCadet
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 4:48 pm

bikerthai wrote:
frmrCapCadet wrote:
Boeing wants mass transit to its factories and trained or highly educated workers.


They are not going to get it. All the mass transit infrastructure is geared toward getting the suburb in to down town. This support Amazon, med-tech and now with the new spur to the east side: Microsoft.

The major Boeing facilies are no where near any commuter rail line. And will not be in any near for my generational future. They rely on busses.

bt


https://www.soundtransit.org/system-exp ... -extension

Note the big (and expensive) jog this is taking to serve Boeing. And projected opening in 2036.

And most of the jobs, at least those that get hit by traffic jams, are downtown. And many of them are not high paying. If you live in the suburbs and work within several miles of your house cars usually do the commute job pretty well, and parking in suburban jobs doesn't cost several hundred dollars a month.
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bikerthai
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 6:24 pm

frmrCapCadet wrote:
Note the big (and expensive) jog this is taking to serve Boeing. And projected opening in 2036.


And if you were to run the line to Everett anyway, to take a direct route and by pass the largest employer in that area would be foolish no matter the cost Delta.

Like I said that time line is beyond my generation.

bt
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strfyr51
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 8:43 pm

in all if this tax break business? People tend to overlook. Boeing is a prime US Defence contractor. I don't think Airbus was so worried about Boeing's tax breaks as much as they were worried about NOT being able to bid as a Prime contractor. Had they even been able to Bid the Air Force 1 contract with the A380? That might have driven all kinds of airport upgrades in the USA making the A380 Viable no matter HOW big of a dud it turned out to be. Boeing hasn't asked for the Tax breaks to end out of their conscience. They're asking because they have an agenda, As of which? is presently unknown. But you can damn sure Betcha! We Weill see it in some near future. Especially if Airbus again decides to expand their Facility down in Mobile Alabama. which would keep them at a disadvantage that Boeing has enjoyed for many years
 
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bikerthai
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 9:52 pm

bikerthai wrote:
frmrCapCadet wrote:
Note the big (and expensive) jog this is taking to serve Boeing. And projected opening in 2036.


And if you were to run the line to Everett anyway, to take a direct route and by pass the largest employer in that area would be foolish no matter the cost Delta.

Like I said that time line is beyond my generation.

bt


Oh and I forgot. If the region is to be successful in establishing a secondary airport, easy access to light rail between Paine Field and Seattle is a must.

The detour does just benefit Boeing. The only benefit I see for Boeing is that if more workers commute by train, they can take away more parking space to expand their facility.

Heck the detour probably benefit the airlines who will fly into Paine Field more.

bt
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frmrCapCadet
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Re: Boeing asks for suspension of tax breaks

Sat Feb 22, 2020 11:09 pm

My comment also relates to a lot of the anti-tax crap coming from big business. It is expensive to run a high population, high technology, high income region.
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trex8
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Re: Boeing asks for suspension of tax breaks

Sun Feb 23, 2020 12:23 am

strfyr51 wrote:
in all if this tax break business? People tend to overlook. Boeing is a prime US Defence contractor. I don't think Airbus was so worried about Boeing's tax breaks as much as they were worried about NOT being able to bid as a Prime contractor. Had they even been able to Bid the Air Force 1 contract with the A380? That might have driven all kinds of airport upgrades in the USA making the A380 Viable no matter HOW big of a dud it turned out to be. Boeing hasn't asked for the Tax breaks to end out of their conscience. They're asking because they have an agenda, As of which? is presently unknown. But you can damn sure Betcha! We Weill see it in some near future. Especially if Airbus again decides to expand their Facility down in Mobile Alabama. which would keep them at a disadvantage that Boeing has enjoyed for many years


I forget where but I read that EU airlines hold more orders in value with Boeing than Airbus holds US orders. Tariffs will hit Boeing harder than Airbus.
Plus if Airbus were to "correct " their illegal behavior it will probably be less painful forthem than for B. They always expected to repay those RLI loans, only at less than the commercial rates interest that would now make them fully WTO compliant. All those WA state B & O tax breaks were never factored into Boeings future costs as having to be paid.
Last edited by trex8 on Sun Feb 23, 2020 12:26 am, edited 1 time in total.
 
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enzo011
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Re: Boeing asks for suspension of tax breaks

Sun Feb 23, 2020 12:25 am

Revelation wrote:
I'm not sure I understand the situation.

Why didn't EU withdraw their offending subsidies before the WTO assigned damages to the US, just like Washington State is now doing?

To keep things simple, I'll quote CNN:

The World Trade Organization (WTO) ruled earlier that the United States could target goods from EU nations because the bloc had failed to comply with an earlier ruling regarding government subsidies for Airbus (EADSY).

Ref: https://www.cnn.com/2019/10/02/business ... index.html

And BBC:

US trade officials said the EU's settlement offer came years too late and did not resolve US concerns about ongoing subsidies. Imposing tariffs is intended to produce a better proposal, they added.

Ref: https://www.bbc.com/news/business-49906815

WTO could still sanction tariffs against the US, but their goal is to gain compliance, and the US is now moving towards doing that, whereas it seems EU is not.

Marketwatch says:

The panel found that the EU had failed to show that it had succeeded in withdrawing French, German, Spanish and British subsidies for the A380 superjumbo, or German and British subsidies for the A350XWB widebody jet.

https://www.marketwatch.com/story/eu-ha ... 2019-12-02

Why is there such inability to show that these subsidies have been withdrawn?


From my understanding, the WTO found that both Airbus and Boeing benefited from subsidies/tax breaks. The timing and sequencing for me seems to correlate to the timing when the cases were brought to the WTO. Boeing started it off, Airbus retaliated with their own case. Boeing won their case and the WTO confirmed that tariffs can be levied. Airbus also won its case and is now waiting for the WTO to confirm the amount of tariffs the EU can levy against the US before proceeding.

The problem is Trump already levied tariffs and is increasing them, so the opportunity to find a sensible resolution seems to disappear, especially as its not just Airbus being hit with tariffs. So why should the EU, if given approval by the WTO to levy tariffs, not go ahead with them?

What is at stake in WTO ruling on Airbus-Boeing trade dispute?

How did the dispute start?

The battle between Boeing and Airbus dates back to 2004, the year after the European aircraft maker’s deliveries overtook those of its US rival for the first time.

The US case challenged subsidies that the European aerospace group had received as long ago as the 1970s. Washington has claimed that $22bn in illegal funding has found its way to Airbus. The EU followed up a few months later with a challenge of its own, alleging that more than $23bn in illegal aid has been channelled to Boeing.

In 2010 and 2011 the WTO ruled that both companies had collected billions in unlawful assistance — Boeing from government contracts for defence and space business as well as tax breaks and Airbus through aid to launch aircraft programmes that was repayable on delivery.


...
What happens next?
When the US imposes tariffs, many European goods will become more expensive if the list provided by the US Trade Representative is any indication.

Washington has signalled some tariffs could hit 100 per cent of the value of the goods imported. It is targeting French wine, Italian cheese and olives, whisky, and cashmere sweaters, among other items. US airlines are worried that the tariffs might also hit aerospace parts and components for commercial jets and helicopters.

If, as expected, the EU retaliates early next year, its tariffs could hit a range of US products.


Airbus Claims On U.S. Tariffs In Boeing WTO Dispute Disagree With Panel Findings

Airbus has made its own claim with the WTO for $12 billion per year in damages resulting from what the company claims were effectively U.S. subsidies for the development of the Boeing 737 MAX, 787 and 777X. The EU has requested WTO authorization to issue tariffs on U.S. goods, including Boeing aircraft, with a decision expected in the spring of 2020.


I am open to correction, but both companies were found guilty. Both claimed victory and both said they would work to ensure compliance. During that time the 777X was launched with more tax rebates, since the ruling, so if anything the case against Boeing shows they don't seem to look comply with the WTO ruling at all. The ruling later will just confirm how much tariffs the EU is allowed to slap on the US, legally, the same as Trump started in October. He loves tariffs and I don't know if he even paused to reflect on the consequences.

So unless the EU and US comes to a resolution between them then this will continue. One month we Airbus fanboys were keeping our heads down with the news on the amount of tariffs allowed, but in a short while we can shout from the rooftops when the positions are reversed. There is a solution to this but it would need adults in the room to sort it out and I don't trust any politician or businessman on either side of the Atantic to behave like adults.
 
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Revelation
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Re: Boeing asks for suspension of tax breaks

Sun Feb 23, 2020 2:34 pm

enzo011 wrote:
So unless the EU and US comes to a resolution between them then this will continue. One month we Airbus fanboys were keeping our heads down with the news on the amount of tariffs allowed, but in a short while we can shout from the rooftops when the positions are reversed. There is a solution to this but it would need adults in the room to sort it out and I don't trust any politician or businessman on either side of the Atantic to behave like adults.

Thanks for the well researched post, it is helpful.

I can see that US implementing the tariffs sanctioned by the WTO is viewed as an escalation.

As you say EU will soon have a chance to retaliate in kind, and IMO probably will do so just to show they won't be pushed around, but as we see WA is trying to rescind the aerospace tax rebate to lessen the level of tariffs the WTO will sanction.

I agree in the hope that adults will sort things out eventually. I hope in an odd way that activating the sanctions shows both sides that they need to find a middle ground.

As per my earlier post, I'm wondering why exactly WTO found the evidence the EU presented to show compliance was not sufficient and why the US feels the EU is still receiving unfair subsidies if RLI has become a market rate loan.
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par13del
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Re: Boeing asks for suspension of tax breaks

Sun Feb 23, 2020 3:00 pm

trex8 wrote:
I forget where but I read that EU airlines hold more orders in value with Boeing than Airbus holds US orders.

That would be a interesting metric if still current. On the narrow body front, only FR orders 737's in bunches, IAG just ordered 200 MAX, in the USA the carriers with A32X / A220 is growing their orders as most already have Airbus a/c in their fleet, indeed we say that the AA orders for Airbus a/c is what created the MAX.

On the wide body front, the A350 is supposed to putting the 777 out to pasture, DL ordered the A330NEO, AF is now ordering the A350 and will not be as large a 777 client going forward.

Not saying it is incorrect that but I cant see that being current, I will have to do more research.
 
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enzo011
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Re: Boeing asks for suspension of tax breaks

Sun Feb 23, 2020 5:12 pm

Revelation wrote:
Thanks for the well researched post, it is helpful.

I can see that US implementing the tariffs sanctioned by the WTO is viewed as an escalation.

As you say EU will soon have a chance to retaliate in kind, and IMO probably will do so just to show they won't be pushed around, but as we see WA is trying to rescind the aerospace tax rebate to lessen the level of tariffs the WTO will sanction.

I agree in the hope that adults will sort things out eventually. I hope in an odd way that activating the sanctions shows both sides that they need to find a middle ground.

As per my earlier post, I'm wondering why exactly WTO found the evidence the EU presented to show compliance was not sufficient and why the US feels the EU is still receiving unfair subsidies if RLI has become a market rate loan.



I think the reason why Airbus was found not to have done enough to show compliance is the same reason why Boeing accepted tax breaks after they were found to be illegal. Neither side really thought anything would happen from here on in, but they ramped up the rhetoric against the other side and proclaimed victory whenever a ruling came out, whatever was found. If the WTO ruled against Airbus then Boeing would proclaim victory, but inevitably there would be some elements that went in favour of Airbus and they would proclaim how they actually won that round. The same when a ruling against Boeing was made, Airbus would claim victory but so would Boeing.

Look at the analysis of this whole mess from before Trump as elected,

Airbus scoffs, Boeing crows as WTO slams EU for failing to address illegal subsidies

Scott Hamilton, Bainbridge Island-based aviation expert with Leeham.net, said he would be “shocked if tariffs are imposed on any Airbus or Boeing products and it would be stupid to impose tariffs against unrelated industries.”

...


But a European source close to the Airbus case, who asked not to be identified, characterized the whole WTO process as a waste of time and money that will not produce any enforceable outcome.

This person said Boeing has merely succeeded in proving the toothlessness of the WTO to the Chinese, the Russians and other competitors.

He pointed out that Canada recently poured $2 billion directly into Montreal-based Bombardier’s new CSeries jet program, unafraid of any consequences at the WTO.

Richard Aboulafia, aviation analyst with the Teal Group, agreed.

“It’s a nice moral victory. It validates what Boeing has been saying. But how does it produce anything tangible?” he asked. “It won’t change much.”

Leeham.net’s Hamilton was even more cynical. “Only the lawyers get rich,” he said.


We will have to wait and see how much the tariffs the EU can levy against the US will be. I don't know how it will work out but seeing as it is about potential sales that each company lost against the other due to the illegal subsidies, it may be while the amounts that were found to be illegal were higher for Airbus (more RLA than tax breaks in how much each received), the areas where it applied means the sales made possible due to those subsidies may be more on the Boeing side.

It is a mess either way and it has been allowed to spiral out of control. We have to remember that Canada provided $2bn to Bombardier for the C-Series but because Boeing wasn't harmed because they have no competition against the C-Series it meant they lost the case.
 
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scbriml
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Re: Boeing asks for suspension of tax breaks

Mon Feb 24, 2020 9:20 am

From what I've read and think I've understood so far...

US currently applies 10% tariff on Airbus planes, rising to 15% in March to address "harm caused to Boeing" by Airbus's non-compliance.
WTO to rule later in May/June on amount of tariffs EU can apply to Boeing planes to address "harm caused to Airbus" by Boeing's non-compliance.
Boeing asks Washington State to suspend existing tax breaks, but what about those already received - will Boeing repay them?

The US will have to get WTO agreement that this measure fully addresses Boeing's non-compliance. Even then, does it address harm already caused to Airbus? It is estimated it will take the WTO a year to make that decision. In the meantime, the EU will still be able to apply tariffs on Boeing planes.

https://leehamnews.com/2020/02/24/europ ... ll-likely/
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