“Every single state is a potential victim of corporate extortion of jobs,” Jay Inslee recently told the Boston Globe. “We’ve certainly felt the sting here and we’d like to change that if we could.” Inslee would like to see a national deal between states that would ban bidding for corporate moves. “In a perfect world that someday may exist, taxpayers won’t get leveraged like that,” he said.
Just which company is Inslee referring to when he portrays Washington State as a “victim of corporate extortion”? Boeing.
Inslee’s ridiculous extortion claim ranks eighth on our list of the most underreported stories of the year.
Lawmakers passed important tax break in 2013
In November 2013, the state Legislature passed “the Boeing tax bill” during an emergency legislative session to keep 777X production in Washington State. At the time, lawmakers from both parties praised the measure as a job-saving measure that would keep billions in manufacturing value inside the state. That sentiment quickly ended for liberals, as Inslee demonstrated by his extreme comments.
But, Inslee isn’t alone in his about-face turnaround when it comes to the Boeing tax incentives. If there was one thing that first-time liberal candidates seeking state office (and a number of the left’s elected officials) had in common during the 2014 election cycle, it was the argument that the Legislature “is willing to let corporations ransack the public treasury.”
Liberals claim Boeing tax break costs state $8.7 billion
Liberals love to point out the Boeing tax measure’s official cost estimate of $8.7 billion from the state Department of Revenue and argue that the bill harms taxpayers. Of course, while $8.7 billion is undeniably a large sum of money, the figure is cited and used disingenuously to fit the political purposes of the far left.
The reality is that the Boeing tax bills costs taxpayers absolutely nothing. It’s a tax break, not a government handout. Moreover, it was mostly an extension of existing special business-and-occupations tax incentives granted in 2003. The tax package was scheduled to expire in 2024. In 2013, the state Legislature extended it through 2040 to cover the expected life of the 777X production line. Ultimately, the measure aimed to align our state’s tax structure with similar taxes on aerospace companies in other states.
The state did not give Boeing money. The $8.7 billion sum was not ever in the state’s coffers—nor would have it been had Boeing decided not to produce the 777X in Washington. Had Boeing moved production, the state’s take on the economic activity surrounding the 777X would have been $0.
Washington State gets $22.3 billion out of the deal
Inslee’s claim of extortion gets all the more absurd when one takes a moment to consider how Boeing would make the money and what Washington State gets out of the deal. Inslee and liberals are talking about extortion of state tax revenue on a project (777X) that did not yet exist and that Boeing would have moved to another state. By every indication, Boeing did not have any intention of producing the 777X in Washington. It’s that fact that produced the 2013 response from state lawmakers in the first place.
You cannot be extorted from (a) money that isn’t yours and (b) money that would not have ever been yours. It wasn’t extortion by Boeing, it was the state asking the company to stay in order to generate some $22.3 billion in revenue through 777X production.
Yes, that’s right. Boeing keeping 777X production in Washington State is expected to generate a whopping $22.3 billion in additional revenue. That’s revenue that would not have existed had not Boeing agreed to stay because it could keep (not take) $8.7 billion of its revenue.
Now, $22.3 billion in additional revenue in return for an $8.7 billion tax break is not extortion. It’s a smart, business-friendly move incredibly valuable advanced manufacturing here in Washington.