Annual disclosure: Tax breaks saved Boeing $230M in 2018

EVERETT — The Boeing Co. slashed its state tax bill last year by $230 million dollars, taking advantage of multiple breaks available to Washington’s aerospace industry.

The aerospace giant recently disclosed its 2018 tax savings in an annual filing with the state Department of Revenue. Boeing and other aerospace firms are required to tell the state how much they save from each tax break.

On the other side of the coin, Boeing invested $14 billion in Washington state last year, the company said.

“The $14 billion Boeing spent in Washington last year reaffirms Boeing’s deep investment in Washington and in our future here,” said Bill McSherry, vice president of government operations for Boeing Commercial Airplanes, said in an email.

Boeing’s 2018 tax savings of $230 million was on par with the $227 million it saved in 2017 but was less than the $242 million tax break it reported for 2016.

The savings stem from a suite of aerospace tax breaks the Legislature approved in 2003. Lawmakers broadened and extended those incentives in 2013 as part of an effort to convince Boeing to assemble the 777X here. The company is building it in Everett, and its first flight is expected by the end of the year.

One of the more generous tax breaks allows Boeing and other eligible aerospace firms to deduct 40% from the business and occupation tax owed the state.

That discount alone allowed Boeing to lop $99 million off its 2018 tax bill. At the full tax rate, which is levied on a company’s annual gross receipts, the amount calculates to about $247 million.

The discount has been a source of contention with rival Airbus, with a World Trade Organization body ruling it illegal this spring.

Boeing also claimed $113 million last year in tax credits related to its business and operations tax liability — a $67 million reduction for pre-production research and development and a $46 million property tax credit.

Boeing is the state’s largest private employer.

“Nearly half of our employees call Washington home, and our commitment to this region is evident through these deep investments in education, employees, infrastructure and innovation,” McSherry said.

In 2018, it employed nearly 70,000 workers in Washington. Companywide, it employed about 150,000 workers, according to information Boeing provided in January.

Most of Boeing’s in-state spending last year was in the form of salaries and wages, and purchases from local suppliers.

The jet maker paid $8.5 billion in wages and $5 billion to local suppliers. Its sizable footprint in Washington also includes $600 million in capital investments, $50 million in community contributions and $31 million for tuition and other fees for Boeing employees who attended school.

In 2018, Boeing hired 8,500 new workers in the state. Factoring in retirements and departures, that was a net increase of 3,984 employees, the Choose Washington Council reported in February.

Boeing plants in Renton and Everett delivered 741 aircraft in 2018, the council reported.

Janice Podsada; jpodsada@heraldnet.com; 425-339-3097; Twitter@JanicePods

Department of Revenue filing by Boeing:

• Business and occupation tax rate reduction: $99 million

• B&O pre-production research and development credit: $67 million

• B&O property tax credit: $46 million

• Sales and use new construction: $5 million

• Sales and use computing: $7 million

• Sales and use data center: $6 million

Total: $230 million

Boeing says it invested $14 billion in Washington in 2018:

• $8.5 billion in payroll.

• $5 billion on Washington suppliers.

• $600 million in capital investments.

• $50 million from Boeing, employees and retirees to community organizations.

• $31 million in education benefits.

• Hundreds of millions in state and local taxes.

Total: $14 billion