It's good to be aviation king. Just ask Boeing.
States are falling all over themselves, promising tax subsidies to get the aircraft manufacturer to move some of its production facilities to their jurisdictions.
Boeing's home state of Washington has enacted $8.7 billion in tax breaks, believed to be the largest corporate tax break any state has ever given to a single company, to try to get Boeing to make its new 777X jets in the Evergreen State.
Boeing 777X image courtesy Aircraft Recognition
A fight with the International Association of Machinists, however, has sent the aerospace giant looking for a new base to build the aircraft.
And states are jumping at the chance to land the promised thousands of jobs and associated economic benefits.
South Carolina was the early favorite, but more than a dozen other states reportedly are wooing Boeing. They include Alabama, California, Texas and Georgia.
Missouri last week became a serious contender.
Four-part tax package: Show Me State legislators, called into a special session the day after Thanksgiving by Gov. Jay Nixon, passed on Dec. 6 a $1.7 billion package of tax incentives over the next two decades to lure Boeing.
The four-part package, according to Tax Analysts, includes:
- The Missouri Works program, which would let a company retain the withholding tax paid by its employees and receive refundable tax credits based on the number of jobs the company creates and wages it pays to its workers.
- Tax credits for a company of up to 5 percent of payroll for new jobs annually for a period of up to 15 years.
- A tax increment financing program that would allow up to 50 percent of the state withholding tax paid by new hires in a development area to be diverted for debt service on bonds issued by a city or county for a portion of the project.
- The Missouri Works Training incentives program, which would allow a withholding tax paid by the workers in new jobs to be diverted to reimburse the company for the cost of training workers through community colleges and on-the-job training.
The generic company referenced in the tax package is, of course, Boeing.
And all of the incentive programs depend on just how many jobs are created, the wages paid, the amount of new capital investment and the cost of worker training programs.
Missouri is willing to take the tax chance on the 777X.
Boeing is expected to make a decision by tomorrow on where it will build the plane.
Washington still has a shot: And don't give up just yet, Washington taxpayers. Boeing just might hang around to take your tax dollars.
Analysts say, according to Reuters, that it seems to make the most sense for Boeing to stay in Washington despite the falling out last month with its union.
Washington State is the home of most of Boeing's commercial aircraft production. It might just be most cost-effective, say aerospace experts, for the company to keep the manufacture of the 777X there.
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