Boeing incentives aren’t “extortion” – they’re good for WA

After a brief administrative* tussle, we now know the value of a tax incentive on construction of airplane manufacturing buildings that benefited Boeing: just under $20 million in 2014. The Seattle Times covered the story extensively on Monday.

More knowledge about state tax incentives and who benefits from them is undoubtedly a good thing. A recent law requiring the release of more company-specific data on state tax incentives is the reason the public now knows this information.

Maybe Boeing was just used to the old way of doing things, but the company actually fought the release of the information. That is unfortunate – not least because the Boeing tax incentives passed in 2013 are good for the state of Washington. The company should vigorously defend them, not try to keep the totals under wraps.

There’s a reason they passed overwhelmingly
We’re not talking about tax giveaways here; they’re incentives to keep incredibly valuable airplane manufacturing right here in Washington. Our state benefits enormously from Boeing’s presence. Just ask governors and business leaders in other states – they’d love to have even a fraction of Boeing’s high-tech manufacturing jobs in their states.

That’s why it’s somewhat amusing to see the showy handwringing in Olympia recently about these incentives. The tax incentive package passed overwhelmingly in a special session in November 2013 precisely because most state leaders grasp that the economic activity Boeing produces, the high-paying jobs it provides, and the taxes it generates far outweigh the theoretical value of the tax incentives.

Simply put, the incentives are a good deal for the state of Washington – no handwringing needed.

Extortion is a strong word
The tax incentives might be the smart move for Washington, but that doesn’t mean Democrats have to like it – including some who strongly supported the incentives package. Gov. Jay Inslee, the man who negotiated the package and called a special session to pass it, went so far as to tell the Boston Globe it was “extortion”:

“Every single state is a potential victim of corporate extortion of jobs,” Inslee said. “We’ve certainly felt the sting here and we’d like to change that if we could.” He wants to see a deal between the states that would ban such bidding for corporate moves. “In a perfect world that someday may exist, taxpayers won’t get leveraged like that,” he said.

And in a perfect world, I wouldn’t have to run off all of that delicious Thanksgiving food, but that hope counts for about as much. States aren’t going to stop competing over valuable jobs any more than nations in our global economy will. It’s simply a fact of life.

Boeing pushed for the package but doesn’t want financial information on the incentives revealed. Inslee and legislative Democrats supported the package but want to score points with tax-happy special interest groups by taking swipes at Boeing. There’s just no need for the dissembling and caveats. The tax incentives are in place because we’d be stupid not to fight to keep these critical manufacturing jobs here. The company and the politicians should embrace that truth instead of trying to duck it.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.