NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate provides the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Saturday, February 3rd, 2018

LIVE from Crosscut Festival: Tax breaks for titans

Hel­lo again from the Cross­cut Fes­ti­val, host­ed by Seat­tle University.

For the sec­ond ses­sion I attend­ed a pan­el titled “Tax breaks for titans” includ­ing Wash­ing­ton state Sen­a­tor Reuven Car­lyle, chair of the Wash­ing­ton Health Ben­e­fit Exchange Board and for­mer Deputy Sec­re­tary for the U.S. Depart­ment of Hous­ing and Urban Devel­op­ment Ron Sims, Kriss Sjoblom of the Wash­ing­ton Research Coun­cil, and Lar­ry Brown from Aero­space Machin­ists Union Dis­trict Lodge 751. The mod­er­a­tor is for­mer Cross­cut Man­ag­ing Edi­tor Drew Atkins.

Atkins first point­ed out the con­text of Ama­zon’s search for a new city to host their HQ2, and the tax incen­tives that gov­ern­ments are offer­ing to try to get Ama­zon to locate there. He also remind­ed every­one that the largest cor­po­rate tax break in US his­to­ry was from Wash­ing­ton state to Boe­ing in 2013.

Rep. Car­lyle said that Wash­ing­ton has the most tax breaks because we have the most upside-down and back­wards tax struc­ture in the nation. Regard­ing the nego­ti­a­tions around Boe­ing tax breaks, he acknowl­edged that there were both “sub­stan­tive wins and sub­stan­tive los­es” for the peo­ple of Washington.

Sims not­ed that in his 2004 run for gov­er­nor, he crit­i­cized tax cuts for Boe­ing, but that it was only an exam­ple of one aspect of the issue. He believes we need(ed) a larg­er dis­cus­sion about tax­a­tion. Tax reform, not tax breaks, are what needs to happen.

In his ques­tion to Brown from the Machin­ists Union, Atkins not­ed that Newark, NJ offered the largest pack­age of ben­e­fits and tax incen­tives to Ama­zon, par­tial­ly because they have a very high unem­ploy­ment rate and want the jobs. Brown said the Machin­ist Union sup­port­ed tax cuts for Boe­ing, but that there is a spe­cif­ic context.

After the ter­ror­ist attacks of Sep­tem­ber 11, 2001, orders for planes dropped dra­mat­i­cal­ly as there was less air trav­el. Twen­ty-thou­sand hourly work­ers were laid off from Boe­ing, plus com­pa­ra­ble num­ber of salaried work­ers. Work­ers were very con­cerned since Boe­ing had moved their cor­po­rate head­quar­ters to Chica­go, and it seemed like Boe­ing’s com­mit­ment to Wash­ing­ton State was wan­ing. So they want­ed to make sure to keep Boe­ing, and their jobs, here.

How­ev­er they also did­n’t know that Boe­ing would be out­sourc­ing wing con­struc­tion to Japan and a sec­ond line to South Car­oli­na. So in the 2013 nego­ti­a­tions, they stip­u­lat­ed that wing and sec­ond line con­struc­tion could not go any­where else, and sup­port­ed the tax incentive.

Atkins said that when­ev­er he brings up attach­ing more strings to the tax cuts for Boe­ing, peo­ple say “we did­n’t have the lever­age” to have done that in our nego­ti­a­tions. He asked Brown why that was.

Brown replied that “I think we had more lever­age than we thought we did.”

He point­ed to delays and cost over­runs with com­po­nents that are being built in Japan and South Car­oli­na, but that Wash­ing­ton’s Boe­ing work­ers have a con­sis­tent his­to­ry of deliv­er­ing projects on time. He point­ed out that Boe­ing has moved over 16,000 jobs out of state since the tax incen­tive pack­age was passed. There have been efforts to imple­ment a tax incen­tive account­abil­i­ty mea­sure, but it has­n’t happened.

Car­lyle shared that in 1995, Wash­ing­ton was the 11th state in the nation in terms of com­bined lev­el of tax­a­tion. Over the next twen­ty years, that went down to 35th. Among the changes that caused this decline, he not­ed Tim Eyman initiatives.

“We are on our way to being a low tax, low ser­vice state,” Car­lyle con­tin­ued. He says Wash­ing­ton res­i­dents are being “nick­eled and dimed to death.” He feels the state is not tax­ing in a respon­si­ble way, that there are very real struc­tur­al issues with how we tax, and pref­er­ences to com­pa­nies like Boe­ing are just a piece of that.

When asked if he had any­thing to add to Car­lye’s com­ments, Sims said “I could­n’t have said it as elo­quent­ly.”  He says that we know we need to fix the sys­tem, and there is going to be a day of reck­on­ing if we don’t.

Car­lyle con­tin­ued to point out that in Wash­ing­ton state, most tax­es are paid by small busi­ness­es and peo­ple in the mid­dle class.

“What we need is con­sis­tent rates, broad­ly applied, with few excep­tions, but we have the exact oppo­site; vary­ing rates, nar­row­ly applied, with hun­dreds of excep­tions.” This was the first com­ment of the day that I wit­nessed to get applause.

When Atkins asked what need­ed to be done in order bal­ance tax­es, Sims said “a new pres­i­dent and a new con­gress.” This com­ment received laughs and loud applause.

Sims con­tin­ued that we cant let insti­tu­tions hit rock bot­tom before we make changes. If they do, that will prob­a­bly prove to more peo­ple that changes need to be made to our tax struc­ture, but he hopes it will not come to that and that we can make nec­es­sary changes soon­er than that.

“If we want to be a vibrant, com­pet­i­tive state for the rest of cen­tu­ry, we have to change,” Sims said.

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