Tax policies help develop state’s strong aerospace cluster

We’ve long maintained that the state’s aerospace tax incentive program have played a key role in developing the industry here. It’s about Boeing, yes, but it’s about more than Boeing.

The Boeing Company anchors the aerospace cluster, a constellation of suppliers, competitors, and other firms that do business here, drawing on the region’s resources to grow, invest and expand opportunity. A paragraph from this Brookings Institution report neatly summarizes how it works. 

Achieving deep prosperity requires improving the productive capabilities of businesses and people in the region. That requires building strong ecosystems for core industries, improving productivity, and engaging in trade—the market foundations from which growth, prosperity, and inclusion emerge.

Tax policy is one element of the business climate, or ecosystem.

One more quote from the report.

As Michael Porter, the Harvard authority on competitiveness, describes it, the anchor firms, supply chains, supporting entities and organizations, research centers and specialized knowledge assets that make up industry clusters arise from a “highly localized process” that creates differentiated competitive advantages tailored for particular industry clusters.

Jerry Cornfield’s story in the Everett Herald on the tax incentives illustrates the concept.

It is no secret that a batch of generous state-sponsored tax breaks helped convince the Boeing Co. to build its newest airplanes in Washington.

What is less known is that these same tax breaks — coupled with Boeing’s presence — are a factor in an increasing number of aerospace suppliers setting down in Snohomish County and throughout the state.

…In all, 287 firms shaved a few dollars to several hundred thousand dollars off their respective tax bills in 2015, according to information submitted to the state.

There’s more.

There are an estimated 650 aerospace suppliers and 1,350-aerospace-related companies operating in Washington that are not named Boeing, according to the state Department of Commerce.

Without the anchor, the cluster would not exist. The returns on smart tax policy have been – and should continue to be – enormously positive for the state, the communities in which the industry has grown and prospered, and the many thousands of men and women employed in the sector. A very good ROI.