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Boeing asks that its big state tax break be suspended

HeraldNet
/ February 19, 2020

The company hopes the move will resolve a trade dispute involving European rival Airbus.

By Jerry Cornfield and Janice Podsada

 

OLYMPIA – The Boeing Co. has asked state lawmakers to suspend a tax break worth billions of dollars in an attempt to resolve an escalating trade dispute between the U.S. and the European Union, home to rival jet maker Airbus.

A resolution could help reduce trade tensions and discourage retaliatory tariffs that could hurt Boeing and other industries.

Democratic leaders in the state House and Senate announced Wednesday they have introduced legislation to suspend Boeing’s preferential business-and-occupation tax rate, which 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 tax break allows Boeing and other eligible aerospace firms to pay a lower business-and-occupation tax rate. In 2018, Boeing shaved $99 million off its state tax bill.

The preferential rate was a factor in an ongoing dispute between the World Trade Organization, which mediates international trade disputes, and Boeing and Airbus.

The WTO has ruled that both Boeing and Airbus are the recipients of illegal subsidies from their host governments. And Boeing and Airbus have accused each other of failing to take steps to end the disputed subsidies.

By requesting that Washington legislators remove the preferential tax break, Boeing may be hoping to avoid “a ruinous trade war over jetliners,” said Kevin Michaels, managing director of Aerodynamic Advisory, a Michigan-based consulting firm.

“The last thing that Boeing needs are tariffs on its airplanes that are going to Europe,” Michaels told The Daily Herald. “You want to remove as many of the possible catalysts for retaliation as possible,” Michaels said.

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