We’re getting our first look at the specifics of the tax breaks provided to Boeing, courtesy of the 2013 special session that secured Boeing’s pledge to build the 777X facility in Everett.
But it may be a long time before we see more.
It’s thanks to legislation that passed earlier that year that provides transparency into the tax incentives provided to Boeing, its suppliers and a range of other businesses in the state, as diverse as the makers of solar panels, beekeepers and hog fuel users.
The $8.7 billion in tax incentives passed by overwhelming margins in House and Senate, extended breaks, due to expire in 2024, until 2040. It also expanded a sales tax exemption for construction of buildings used in the manufacture of airplanes, such as the new 777X facility.
It’s the details on the sales tax break that we’re seeing now. The state Department of Revenue, following a public records request by The Seattle Times, released figures that showed Boeing saved $19.6 million in sales tax in 2014, a portion of what Boeing is expected to save each year between now and 2040.
So why aren’t we seeing more?
Because the state Department of Revenue is choosing to interpret the tax transparency provision very literally.
Where previously the public saw only estimates of the tax breaks enjoyed by particular industries, the change in the legislation sought to reverse the practice of hiding the specific details of the tax breaks benefitting individual companies. The change sought by Rep. Reuven Carlyle, D-Seattle, requires reports through the Department of Revenue as to the value of tax savings for individual companies within two years of any new or expanded tax break. Noting what’s good for both goose and gander, newspapers are among those whose tax breaks will be published.
But because the Boeing tax package passed by the Legislature extended breaks that would not have expired until 2024, the public can’t see the details on the new portion of the incentives until 2026. The Department of Revenue has determined the legislation only applies to newly created tax breaks, the extension that begins in 2025.
Carlyle told the Times he disagreed with the Revenue Department’s interpretation; the Legislature’s intent should have been clear that any change in legislation regarding a tax break should trigger the transparency rules. The Times is appealing the state agency’s interpretation. We hope other newspapers and open government advocates join in the request.
And while the Legislature’s to-do list for its upcoming 60-day session is filling up quickly, amending the transparency provision to make its intent even clearer may be necessary.
There’s a place for tax incentives, especially when used to win agreements that keep and develop jobs in our communities. Along with the jobs, part of the calculus that went into agreeing to the estimated $8.7 billion in tax breaks for Boeing, was the anticipation that building the 777X in Everett would provide $21 billion in tax revenue for the 16 years of the extension.
But the public needs to see the numbers — and not just rough estimates — on what we’re spending on tax cuts and what we’re getting in return.