Reuters is reporting that the European Union may challenge the $8.7bn in tax breaks Washington legislators voted to grant Boeing in return for locating assembly of the 777X and its wing in the state.
Readers know we worried about this when the Legislature voted for these in a hurry-up session. We were blown off by the state and even the mainstream media in raising these concerns.
State officials asserted at the time that the State was merely “extending” the 2003 tax breaks voted for the 787, totaling $3.2bn, for the 777X. The 787 tax breaks had been ruled illegal by the World Trade Organization, and state officials brushed this aside saying the ruling was under appeal.
We found this to be an astounding position, particularly considering that Gov. Jay Inslee, as a Congressman, demanded that the WTO findings of illegal tax breaks to Airbus be considered during the KC-X USAF tanker competition, despite a pending appeal.
In the Reuters story, Tim Hepher writes:
Boeing said tax decisions by Washington were meant for the whole industry in the state, including some Airbus suppliers, and have been designed to comply with WTO rulings.
“The $8.7 billion figure that’s mentioned is the state’s estimate of the total value of its incentives for the entire commercial aerospace industry over 16 years,” Boeing spokesman Charlie Miller said. “The benefit to Boeing will only be a fraction of that amount.”
The first statement is certainly true. We’re a bit flabbergasted by Miller’s claim that Boeing will receive only a “fraction” of the tax breaks.
The tax breaks have come under much after-the-fact criticism when Boeing announced that more engineering jobs would be moved out of state. Critics of the tax breaks noted that there had been no job guarantee provisions in the Legislation, freeing Boeing to move jobs–and it is doing just that.
Although Boeing hasn’t said how many jobs will be associated with the 777X in Washington, it’s clear that more automation and robotics will be used on the X than on the 777 Classic.