Tag Archives: Boeing

Tax Sanity Pushes for a Tax Expenditure Budget for Increased Accountability and Transparency

Tax Sanity has been busy drafting legislation to create a tax expenditure budget bill to increase transparency and accountability over Washington State’s ever growing tax exemptions.  The most recent special legislative session saw the Governor and the State Legislature push for additional tax breaks for Boeing, creating the largest state corporate tax break in the nation. As Reuters reported, “The Washington state legislature … passed a measure to extend nearly $9 billion in tax breaks for Boeing through 2040 in an embattled effort to entice the company to locate production of its newest jet, the 777X, in the Seattle area.”  And even it may not be enough to keep Boeing here as now a race to the bottom is occurring as other states compete to try to lure Boeing to their state.

Tax Sanity believes the continued push to create more and more tax exemptions is out of control.  There needs to be more accountability for results and more transparency in who is benefiting and who is losing. They propose doing this by requiring the legislature to create a tax expenditure budget detailing all the exemptions, their cost and who they benefit that the legislature has to adopt every two years as part of the general appropriations budget or exemption will expire.

Their latest draft which they are urging legislators to adopt has also been filed as an initiative to the legislature.  Initiative 626 has just received the following ballot title and summary:

Ballot Title
Initiative Measure No. 626 concerns taxes.

This measure would require new and existing discretionary tax preferences to be authorized every two years in a tax expenditure budget and repeal requirements for advisory votes of the people on tax increases.

Should this measure be enacted into law? Yes [ ] No [ ]

Ballot Measure Summary
This measure would require the legislature to approve new and existing discretionary tax preferences every two years, in a tax expenditure budget detailing the fiscal impact and purpose of each tax preference. The tax expenditure budget would be included in the biennial omnibus operating appropriations act. Tax preferences not included in the tax exemption budget would expire at the end of the fiscal year. The measure would repeal requirements for advisory votes on tax increases.

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Washington State currently has over 650 tax exemptions.  While some are required by our State Constitution or the US Constitution or by Federal law, the discretionary ones still number over 400. They are usually described as either an exemption, exclusion or deduction from the base of a tax; a credit against a tax; a deferral of a tax or a preferential tax rate. They are all  off budget spending that once granted almost never is rescinded. Only 10% of them have sunset dates. They represent expenditures of tax dollars which if not exempted from collection would be available as state revenue to fund critical state needs like education or health care.

The magnitude of the situation is not clear to the general public. Yet last year the Washington State Department of Revenue in its once every four year report on tax exemptions listing the discretionary tax exemptions points out why they are more appropriately called tax expenditures.  This is what most other states call them.  They are revenue that is not collected from some taxpayers but is collected from others. They noted that while we collected some $6.5 billion in B&O tax revenue in the last biennium, we did not collect but “exempted” some $7.5 billion.  We collected less than half the B&O tax revenue  available if every business paid the same.

When the sales and use tax collection was added to the B&O tax collection, essentially the same net result occurred.  The state collected some $21 billion in revenue but excluded $20 billion from collection.  Tax exemptions continue to grow with the Legislature adding another 15 in the 2012 session.

The process is out of control. This is why Tax Sanity is urging the state legislature to let the public know the extent to which they are supporting tax expenditures, who is benefiting and how much they are receiving. No future legislature is bound by the actions of past legislatures. Legislators have a responsibility to use tax dollars wisely, including being judicious and wise in giving out tax breaks. The Legislature needs to be held accountable for the current out of control use of tax exemptions to benefit special interests and business while cutting public services like education and health care. Requiring them to adopt a tax expenditure budget every 2 years as part of the regular operating appropriations budget and end the shifting of state revenue to off budget spending that lacks accountability and transparency.

Protecting Aerospace Workers in Washington State

An Open Letter to the Washington State Legislature:

Yesterday, the Boeing Company announced that they intended to move production to South Carolina in order to have planes built by inexperienced non-union workers making an average of less than $14 per hour rather than having planes built by highly skilled and highly experienced union workers in Washington State making an average of $26 per hour.

This is one more step in what many have called the “disappearing Boeing Airplane” during the past 20 years. While some have blamed the union and/or the Legislature for this problem, the truth is that both the union and the Legislature have made billions of dollars in concessions to the Boeing company. These billions of dollars in concessions were then used by Boeing to help finance their multi-billion dollar plant in South Carolina.

This latest decision by Boeing’s upper management is perplexing because the South Carolina plant has already made numerous errors which set back production of the Boeing Dreamliner by years. Further investment in South Carolina appears to be throwing good money after bad and places the future of the entire Boeing Company in doubt. This is not just my opinion. It is also the opinion of nearly every airline industry analyst. The upper management of the Boeing Company appears to be cutting their own throat- as well as sticking a knife in the back of aerospace workers in the State of Washington.

This problem concerns me because my grandfather, William Gunnerud, helped start the Machinists Union in the 1940’s and spent his whole life building Boeing Airplanes. Many members of my family worked for Boeing. While there may not be much we can do about the reckless decisions of Boeing’s upper management, there are some steps we can and should take now to protect the aerospace industry and aerospace workers here in the State of Washington.

The Legislature should draft and pass a bill authorizing public–private aerospace partnerships. We attempted to do this in giving billions of dollars in tax breaks to Boeing in the past 10 years. But the money was given away without any conditions. In hind sight, that was a mistake. This new partnership must include several specific conditions:

· First, it must include an employee cooperative so that the employees are the owners of the company. Employees are much less likely to outsource their jobs than employers. Also, Washington State has a long history of successful cooperatives (such as Group Health Coop) and we should form a similar public private aerospace partnership here in Washington State.

· Second, such a cooperative should receive the maximum possible tax advantages including exemption from our State sales and B & O taxes for at least the next ten years and until such time that it turns a profit of at least one billion dollars.

· Third, as a condition of receiving these billions of dollars in tax breaks, this new employee owned company would agree that as much production as possible, including sub-contractor work, would occur here in the State of Washington.

· Fourth, should this new company ever leave the State of Washington, they would be required to pay back all tax breaks given to them.

· Finally, in order to pay for the tax breaks to be given to this new company, we should immediately eliminate any further tax breaks to the Boeing Company and require them to pay their full share of State sales taxes and B & O taxes. In short, we should only give tax breaks to companies who are committed to protecting and preserving the aerospace industry here in the State of Washington.

We may not be able to do much about the upper management of Boeing committing suicide, but we can and should protect the aerospace industry and aerospace workers in Washington State from going down with them. I therefore hope you will consider drafting such a bill for consideration and approval during the 2010 legislative session.

David Spring, M. Ed.