$8.7 BILLION IN TAX BREAKS
Was Governor Inslee and state legislators "played" like small town fools?
April 13, 2014
(REGIONAL) -- Promises promises. The irony of the situation is not lost on everyone.
Old photo of Boeing's original manufacturing building in South Seattle in the early days.
Barely had the dust settled from Washington Governor Jay Inslee along with state legislators falling all over themselves to rush through a $8.7 Billion tax break deal for Boeing - in order to keep Boeing jobs in the region - than Boeing announces yet another job exodus out of state of 1,000 good paying white collar engineer jobs.
The tax break giveaway occurred roughly at the same time that Boeing's blue collar machinist's union - under heavy pressure from the same politicos - decided to give in and bend for the first time in the union's history and do a give-away to the company on their once sacred pension issue, an issue they had fought very hard for over the years.
They did the giveaway to preserve jobs.
But since March of last year there has been a huge sucking sound heard round the region -- the sound of Boeing jobs flying out of here like the proverbial bats out of hell as if there was no tomorrow and no $8.7 Billion tax break deal from politicians to keep that from happening in the first place.
With Boeing's announcement this week that it would shift another 1,000 engineering jobs from the Puget Sound area, that brought the total to more than 4,300 white collar jobs the company has decided to move from the region since March of last year.
Assuming an average worth for each job at about $80,000 including overtime and benefits - and that may be low - Boeing, with the 4,300 jobs it has moved out of this market has left a $344,000,000 money hole in the region for every year from here on out.
That is a lot of houses, vacation cabins, new cars, trucks, boats, big screen TV's, clothes and a lot of other stuff local retailers will not be selling next year and the year after.
One man who saw this coming was the Godfather of the consumer movement Ralph Nader.
He wrote a blistering open letter in December 2013 to Boeing's CEO Jim McNerney saying the squeeze that was being put on the Puget Sound area's machinist's union over the contract extension to build the new 777X jetliner here in the Seattle-Everett area, was basically a squeeze for more "corporate welfare."
It was nothing more, he said, than a bid to get concessions from the unions and more sweet tax breaks from the state.
Among other things Nader said to McNerney:
"You’re holding an auction for your long-time workers jobs in other states, inciting a bidding war whereby states are giving away taxpayer assets to lure your 777X assembly factory with huge tax holidays and other subsidies.
Washington state outdid itself with a new law, signed by Governor Jay Inslee with the largest state business tax break package for Boeing in history. The tax escape law “will give Boeing and its suppliers about $8.7 billion in tax breaks between now and 2040,” according to the Citizens for Tax Justice (CTJ) calculations.
CTJ adds that “Boeing has managed to avoid paying even a dime of state income taxes nationwide on $35 billion in pretax U.S. profits.” Boeing also received tax advantages from the federal government, including $1.8 billion in federal income tax rebates on its $35 billion in U.S. profits between 2003 and 2012. "
And there is one other guy who has something to say about all these Boeing jobs being moved out of the region.
His name is Andy Nicholas. He is a fiscal analyst at a Seattle think tank called the Washington State Budget and Policy Center.
He testified at all three public hearings on the state's multi-billion dollar tax giveaway to Boeing that state legislators and governor Inslee were essentially being played like violins by Boeing (only he used kinder language) because the deal was a "gentleman's agreement" -- there was no binding clause on any piece of paper requiring Boeing to maintain any jobs in the region.
According to a report in the Seattle Times, Nicholas wasn't against giving Boeing taxpayer funded incentives he simply thought Inslee and the rest of them cut a lousy deal for taxpayers -- meaning no tit for tat on that $8.7 Billion.
Nicholas told the Times the deal our state's politicians cut was "more of a handshake than a contract. It contains no guarantees our state will get more Boeing jobs. It also has no language to dissuade Boeing from moving thousands of jobs out of state, even as it allows the company to continue to reap the tax breaks."
He said welfare recipients, “have to meet stronger accountability requirements than this."
Nicholas again from the Times piece:
“It’s frustrating, because this is exactly what we were getting at it those few days in Olympia. This tax-break package was written so loosely it gives Boeing free rein to do whatever they were going to do anyway.”
The law says the Boeing company has to site a new plant here to get the tax breaks but the kicker is there are NO net job targets "as is common" in these deals, according to the Times piece and the deal also says nothing about whether Boeing can move other work out of state, such as for the 787.
From the Times report: "Lawmakers claim they regret not getting tougher language on the 787 the first time, as Boeing eventually sent a lot of that work to South Carolina. Here they had another chance, and they didn’t do it again.
“It all has that sense of ‘fool me twice,’ ” Nicholas says. “We’re getting up to ‘fool me three times,’ or more. ”
Read more about what Nicholas has to say on the matter here .