Shawn Vestal: The Boeing tax cut may not be the economic-development model we’re looking for

Here’s a thought experiment: Instead of trying to give everyone the same tax deal as Boeing, why not give Boeing the same deal as everyone else?

This is what you might call an extremely rhetorical question. It’s in the same vein of possibility as: Hey, Washington lawmakers, why not give an income tax a shot? Or: Howsabout taking a break from all the initiatives, Mr. Eyman?

But this state is paranoid about the income tax, Eyman’s initiatives are as ceaseless as the sun, and we’re definitely not going to raise taxes on Boeing.

That doesn’t mean we should expand the Boeing experiment, though.

Senate Republicans worked hard this session to extend Boeing’s sweetheart tax rate to all manufacturers. This would be a matter of fairness to smaller manufacturers, supporters argued, and a way to support jobs statewide. The cut would have amounted to a reduction in the business and occupation tax of about 40 percent for 10,000 manufacturers statewide; it would have been phased in, reaching a total value of $86 million by 2027.

In a session that produced historic changes to school funding – and a lot of bickering over negotiations carried out with the transparency of a Masonic ritual – it was this tax cut that Republicans crowed about with the most pride when the budget deal was announced last week.

They are now howling in outrage, however, because Gov. Jay Inslee excised the cut with his line-item veto. Some conservatives depicted this as a move that will kill jobs statewide, which is a whole new expression of tax-cut dogma: Jobs are killed not only when taxes are raised, apparently, but also when they aren’t lowered.

It’s a jobs bloodbath out there, people.

There’s plenty of argument over this veto. Senate Republicans accuse Inslee of breaking his word and fouling the atmosphere of compromise, and are kinda-sorta threatening to hold the capital budget hostage. A lot of House Democrats urged the veto, arguing the manufacturing tax cut was a sneaky last-minute addition to budget negotiations with no accountability.

Inslee says he never promised anything, and he blasted the provision: “It was done in the middle of the night. It had zero accountability. There’s not a single job that will be produced, that they can prove will be produced from this.”

He was talking about the bill he vetoed. But – and here’s the relevant point regarding our thought experiment – he could practically have been talking about the great Boeing tax cut of 2013.

Remember that? When Inslee called the Legislature to a hurry-up special session November 2013? When state officials were living in fear that Boeing, the source of so many good jobs in the state for so long, would take away thousands of those jobs? When, in an effort to avoid this, lawmakers crammed through tax breaks in three days that were estimated to total $8.7 billion by 2040?

It was the fattest stack of state corporate welfare in history.

Guess what it didn’t buy? Job security. More than 12,000 Boeing jobs have gone away in our state since the tax cuts took effect.

Additionally, it was a gross underestimate of how much revenue the state was giving up.

Boeing received a 40 percent reduction in its business and occupation tax. However, in practice, the company’s tax break – when other tax credits are figured in – has amounted been twice that or more, according to an evaluation by Seattle Times columnist Danny Westneat.

All told, Boeing’s tax break in 2015 added up to $305 million, and it paid almost no B&O tax, the Times reported.

To put that into context, Boeing’s 2015 tax break would pay for about eight-and-a-half years worth of fines for legislative foot-dragging on the McCleary school-funding order, at the current rate of $100,000 a day.

Or, to put it into another context, it’s triple the amount the state’s putting toward improved mental health facilities in the upcoming biennium.

Boeing is a big, important employer in Washington. Perhaps it’s worthy of its sweetheart tax status. Maybe, as the company argues, it has kept its word to the state, maintained a relatively high proportion of workers here as the company shrinks, kept plants here rather than moved them, and has been, overall, a boon to the state, even with all the foregone taxes.

It would certainly be a mistake to look at this picture and draw a conclusion based only on state taxes. Boeing is engaged in a global, complicated, highly specialized and technical business, and the number of different factors that influence its bottom line – and employment decisions – is far larger than its state tax rate.

But: Boeing got a record tax break that turned out to be much bigger than initially estimated, in order to keep the company committed to Washington workers. It began eliminating jobs less than a year later, and has done so steadily ever since. The company has had three rounds of layoffs this year, and has told workers to expect more.

As a strategy for creating jobs, it’s not a model that cries out for expansion.