Seattle Times: Don’t tinker with aerospace tax incentive

The Seattle Times editorial board makes a compelling argument that state lawmakers should refrain from amending the state’s successful aerospace tax incentive program in the aftermath of a recent WTO ruling.

The World Trade Organization’s (WTO) ruling against Boeing tax subsidies puts Washington state in an awkward position.

Until appeals are exhausted and provide more clarity, the state should hang tight and refrain from tinkering with the complex and controversial subsidy legislation. Besides, the 2017 Legislature has more than enough work to do already.

We earlier took note of Boeing’s statement calling the WTO decision a “complete victory for the United States, Washington and Boeing.” And we believe the value of the package has been consistently overstated

The Times editorial says,

Benefits of the state investment can be seen in Everett, where Boeing has now spent more than $1 billion on its facility for building advanced, composite wings for the 777X.

This work involves a constellation of suppliers. It also expands the cluster of companies and expertise working with advanced composites in Washington.

That cluster, the jobs it supports and the future opportunities it creates should continue, regardless of what happens with the WTO.

The value of that cluster has been well documented, including this economic impact analysis, which reports,

In 2014, gross revenues tied to aerospace, industry-wide, totaled nearly $59.5 billion (estimated), up from $52.7 billion in 2012 (expressed in 2014 dollars). The cluster includes an additional more than $10.0 billion among aerospace-related industries, for a total of $69.5 billion in revenues in the cluster (up from $61.6 billion in 2012, expressed in 2014 dollars). 

The cluster employed an estimated 93,400 workers in 2014 in Washington State, down from 94,200 in 2012. These workers earned covered wages of nearly $10.6 billion in 2014, or nearly $13.5 billion when adjusted to include benefits, up from $12.2 billion in 2012 (with benefits, adjusted for inflation to 2014 dollars).

The Times concludes,

Waiting for the WTO process to work its course for a few more years could be a way for Washington state and the Boeing dispute to ride out this political storm over trade.

Washington may eventually have to modify its aerospace-retention plan to help the U.S. comply with WTO trade agreements. But the state should wait to tinker until appeals are complete and there’s more clarity about what, if any, changes are needed.

Makes sense to us.