Bill repealing Boeing tax break clears the state Senate

OLYMPIA — The state Senate on Tuesday approved a much-worked bill to repeal a tax break for Boeing — but not give it all back in the future.

Senate Bill 6690 seeks to resolve an international trade dispute between the U.S. and the European Union and prevent billions of dollars in retaliatory tariffs on the aerospace giant’s planes, its suppliers’ products and other Washington exports such as fruit, wine and seafood.

This agreement “keeps faith with our workers and keeps faith with our aerospace sector,” Sen. Marko Liias, D-Lynnwood, the bill’s sponsor, said during the floor debate.

It passed on a 43-5 vote and now goes to the House for action.

“We applaud the Senate for its commitment to full WTO compliance,” Boeing spokesman Bryan Watt said in an email. “We support this legislation and look forward to the House vote.”

The Boeing Co. asked state lawmakers to roll back a preferential business-and-occupation tax rate which the World Trade Organization targeted as an illegal trade subsidy.

The lower rate has saved the company hundreds of millions of dollars since 2003. In 2013, that tax break was extended to 2040, helping convince the company to build the 777X in Everett.

The aerospace giant wanted the full tax break reinstated when the dispute ended. But many Democratic lawmakers didn’t want to do so unless they could impose some new conditions on it.

For several days, Democratic members of the House and Senate, and a representative of Gov. Jay Inslee, worked on language.

What emerged Tuesday would restore only a portion of the tax break if the company successfully resolves the trade dispute and meets certain conditions.

Currently, the company pays a business-and-occupation tax rate of 0.2904%. Starting April 1, it would be gone and the company’s rate would rise to 0.484%, an increase of 40%, according to the legislation.

That rate would come back down to 0.357% — a roughly 25% cut — once the Washington Department of Commerce verifies that the U.S. and the European Union have entered into a written agreement resolving any World Trade Organization disputes involving large civil aircraft.

In addition, Boeing must prove that a portion of its workforce, three-tenths of 1%, are apprentices. To keep the lower tax rate, the percentage both at Boeing and, separately, in the rest of the aerospace industry must be 1.5% by April 1, 2026, or within five years after the lower tax rate is reinstated.

“Everyone is fairly equally unhappy,” House Speaker Laurie Jinkins, D-Tacoma, said of the deal.

There’s been a concerted but unsuccessful effort since 2013 — when lawmakers extended the tax break to get the 777X built in Washington — to trim the incentive as the company shed thousands of jobs.

This bill doesn’t secure that, she said. It does provide a clearer focus on hiring apprentices, which was important to members.

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.