Aerospace isn’t the only industry that benefits from state tax breaks

  • By Dan Catchpole and Jerry Cornfield Herald Writers
  • Tuesday, May 3, 2016 8:57pm
  • Local News

EVERETT — The Boeing Co. saved more than half a billion dollars on state and local taxes in Washington over the past two years.

The aerospace giant is not the only beneficiary, though. Individuals, business and other taxpayers are expected to avoid about $20 billion in taxes this year thanks to a long list of tax breaks, according to estimates by the state’s Department of Revenue. That is more than Washington actually expects to collect from taxes.

Tax breaks for businesses can be controversial, especially when local and state lawmakers struggle to shore up public budgets. Supporters often justify the incentives as giving up some tax revenue now to spur economic growth.

Aerospace is not the only industry to benefit. The agricultural, biomedical and high tech sectors are some of the biggest beneficiaries. Microsoft saved $163.7 million on its 2014 tax bill, and Amazon saved $34.9 million.

Newspapers benefit from tax breaks, too. The state expects the industry to save $1.1 million on taxes this year due to a lower business and occupation tax rate approved by lawmakers in 2009. Readers have not had to pay sales tax on newspapers since 1935. The state estimates readers will save $15.6 million this year.

Many but not all tax-break beneficiaries are required to tell the state how much they saved. Boeing’s disclosure marks the first time the state has released a firm’s savings from a slew of aerospace tax incentives passed in 2003 and extended in 2013. The state revenue department is expected to report other firms’ savings in the next few weeks, said the agency’s spokeswoman, Kim Schmanke.

Boeing’s savings shot up from nearly $217 million in 2014 to $304.8 million last year, according to information released by the state.

The company said last week that it put $13 billion into the state last year, including “hundreds of millions of dollars” for taxes.

That amount also included spending on new buildings for 777X production and assembly. The plane is Boeing’s newest airliner, and is expected to go into production in Everett in 2017.

The 777X also likely explains why Boeing saved more on its tax bill last year. The biggest increases came from tax breaks connected to construction for airplane production or research and design costs of a new airplane, according to revenue department data.

The new airplane means thousands of jobs at Boeing and suppliers in Snohomish County for years to come. The aerospace tax incentives mean Boeing will save billions of dollars at least until 2040, when they expire.

The tax savings — for Boeing and others — are not easy to stomach for Snohomish County Councilman Brian Sullivan. The County Council is expected to ask voters in August to raise the sales tax to pay for more police, prosecutors, defense attorneys and other criminal justice expenses.

Cutting some taxpayers’ bills often means collecting more from others or reducing public services.

“This is not a tax break. This is a tax shift,” Sullivan said. “It’s not just Boeing. It’s other companies, too. We have to get the money from somewhere. That means we have to make up the difference from the people we represent and the small businesses in the community.”

Sullivan backs state lawmakers’ efforts to tie Boeing’s tax credits and lower rates to keeping a minimum number of jobs in the state.

The airplane maker is a “great employer,” he said. “At the end of the day, even Boeing has to understand this puts a huge amount of pressure on our services and our ability to pay for services.”

Everett Mayor Ray Stephanson said he’s “absolutely perplexed” when he hears people talking about “how much we could do with that money” from Boeing and other companies.

“I think what people are missing here is if we didn’t have Boeing … we wouldn’t have the $13 billion investment,” he said.

“I think it’s a very good deal for the state of Washington and the city of Everett,” he said. “If we can’t be competitive, those jobs will go somewhere else. Without them, we would be a different city.”

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

2014 state and local tax incentive savings

Biggest savers among for-profit companies based on publicly disclosed data. This list could change as state officials release more information about the tax savings of aerospace companies other than Boeing.

Company Tax savings
Boeing Co. $216,963,499
Microsoft Corp. $163,673,856
Amazon $34,913,922
Portland General Electric $23,355,665
REG Grays Harbor $7,283,104
Seattle Genetics $1,684,416

Large Snohomish County employers in 2014

State and local tax-incentive savings of employers other than Boeing. This list will change as more data about aerospace tax incentives are released.

Company Location Tax savings
Seattle Genetics Bothell $1,684,416
SNBL USA Everett $1,485,981
CMC ICOS Biologics Bothell $927,036
Korry Electronics (Esterline) Everett $735,438
Fluke Electronics Everett $436,654
UniEnergy Technologies Mukilteo $406,125
Eldec (Crane Aerospace) Lynnwood $316,842
Hampton Lumber Darrington $104,268
Intermec Technologies (Honeywell) Lynnwood $91,498

Breakdown of Boeing’s savings

Incentive program 2015 2014
Aerospace computer, software and peripherals sales-and-use tax exemption $3,000,000 n/a
Aerospace manufacturers reduced business-and-occupation tax rates $106,059,430 $102,702,704
Aerospace manufacturing site sales-and-use tax exemption $51,400,000 $19,586,512
Aerospace preproduction expenditures business-and-occupation tax credit $105,677,735 $75,383,434
Aerospace property and leasehold excise taxes business-and-occupation tax credit $34,329,766 $19,290,849
Data center sales-and-use tax exemption $4,300,000 n/a
Total incentive amount claimed $304,766,932 $216,963,499

Source: State Department of Revenue

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

A firefighter stands in silence before a panel bearing the names of L. John Regelbrugge and Kris Regelbrugge during the ten-year remembrance of the Oso landslide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
‘Flood of emotions’ as Oso Landslide Memorial opens on 10th anniversary

Friends, family and first responders held a moment of silence at 10:37 a.m. at the new 2-acre memorial off Highway 530.

Julie Petersen poses for a photo with images of her sister Christina Jefferds and Jefferds’ grand daughter Sanoah Violet Huestis next to a memorial for Sanoah at her home on March 20, 2024 in Arlington, Washington. Peterson wears her sister’s favorite color and one of her bangles. (Annie Barker / The Herald)
‘It just all came down’: An oral history of the Oso mudslide

Ten years later, The Daily Herald spoke with dozens of people — first responders, family, survivors — touched by the deadliest slide in U.S. history.

Victims of the Oso mudslide on March 22, 2014. (Courtesy photos)
Remembering the 43 lives lost in the Oso mudslide

The slide wiped out a neighborhood along Highway 530 in 2014. “Even though you feel like you’re alone in your grief, you’re really not.”

Director Lucia Schmit, right, and Deputy Director Dara Salmon inside the Snohomish County Department of Emergency Management on Friday, March 8, 2024, in Everett, Washington. (Ryan Berry / The Herald)
How Oso slide changed local emergency response ‘on virtually every level’

“In a decade, we have just really, really advanced,” through hard-earned lessons applied to the pandemic, floods and opioids.

Ron and Gail Thompson at their home on Monday, March 4, 2024 in Oso, Washington. (Olivia Vanni / The Herald)
In shadow of scarred Oso hillside, mudslide’s wounds still feel fresh

Locals reflected on living with grief and finding meaning in the wake of a catastrophe “nothing like you can ever imagine” in 2014.

Lynnwood
Crash in Lynnwood blocks Highway 99 south

The crash, on Highway 99 at 176th Street SW, fully blocked southbound lanes. Traffic was diverted to 168th Street SW.

The view of Mountain Loop Mine out the window of a second floor classroom at Fairmount Elementary on Wednesday, Jan. 10, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
County: Everett mining yard violated order to halt work next to school

At least 10 reports accused OMA Construction of violating a stop-work order next to Fairmount Elementary. A judge will hear the case.

Imagine Children's Museum's incoming CEO, Elizabeth "Elee" Wood. (Photo provided by Imagine Children's Museum)
Imagine Children’s Museum in Everett to welcome new CEO

Nancy Johnson, who has led Imagine Children’s Museum in Everett for 25 years, will retire in June.

Kelli Littlejohn, who was 11 when her older sister Melissa Lee was murdered, speaks to a group of investigators and deputies to thank them for bringing closure to her family after over 30 years on Thursday, March 28, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘She can rest in peace’: Jury convicts Bothell man in 1993 killing

Even after police arrested Alan Dean in 2020, it was unclear if he would stand trial. He was convicted Thursday in the murder of Melissa Lee, 15.

Ariel Garcia, 4, was last seen Wednesday morning in an apartment in the 4800 block of Vesper Dr. (Photo provided by Everett Police)
Search underway to find missing Everett child, 4

Ariel Garcia was last seen Wednesday morning at an apartment in the 4800 block of Vesper Drive.

The rezoned property, seen here from the Hillside Vista luxury development, is surrounded on two sides by modern neighborhoods Monday, March 25, 2024, in Lake Stevens, Washington. (Ryan Berry / The Herald)
Despite petition, Lake Stevens OKs rezone for new 96-home development

The change faced resistance from some residents, who worried about the effects of more density in the neighborhood.

Rep. Suzan DelBene, left, introduces Xichitl Torres Small, center, Undersecretary for Rural Development with the U.S. Department of Agriculture during a talk at Thomas Family Farms on Monday, April 3, 2023, in Snohomish, Washington. (Olivia Vanni / The Herald)
Under new federal program, Washingtonians can file taxes for free

At a press conference Wednesday, U.S. Rep. Suzan DelBene called the Direct File program safe, easy and secure.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.