Legislature flies wrong way on World Trade Organization issue
- WTO complaint could be settled by giving all manufacturers the same rate
- 10,000 Washington manufacturers would benefit from 40 percent tax cut
- 50,000 manufacturing jobs have been lost in Washington since 2000
- Inslee vetoed general manufacturing tax reduction in 2017
OLYMPIA — Sen. Doug Ericksen, R-Ferndale, says the Washington legislature is missing a big opportunity in its excitement over Boeing’s request to cancel a tax break worth $100 million a year. Rather than raising taxes for Boeing, Ericksen says lawmakers ought to cut taxes for every manufacturer in the state.
“Think about the jobs we could create all around the state, not just in Seattle,” Ericksen said. “If it’s good for Boeing, it’s good for the state of Washington.”
Lawmakers voted in 2017 to give every manufacturer in Washington the same tax rate as Boeing, but the measure was vetoed by Gov. Jay Inslee.
Now that special treatment for Boeing and its suppliers is creating problems for aircraft exports. Boeing hopes to head off sanctions from the World Trade Organization, which ruled last year that the special tax rate is an illegal subsidy giving the aircraft manufacturer an unfair advantage in the European market. To keep aircraft manufacturing in Washington, lawmakers reduced state business and occupations tax rates for aerospace by 40 percent in 2003, and they extended the tax break in 2013.
“Boeing is right to be concerned about the WTO ruling,” explained Ericksen, ranking member on the Senate Environment, Energy and Technology Committee. “But the real issue is a matter of disparate treatment for Washington manufacturers. We could settle the WTO’s complaint just as easily by taxing all manufacturers the same.”
Ericksen notes that Washington’s manufacturing sector has lost 50,000 jobs since 2000. About 10,000 Washington manufacturers would benefit from a general manufacturing tax cut.
Ericksen has long advocated a general manufacturing tax reduction, including a specific proposal that remains under consideration this year, Senate Bill 5608. Although extension of the tax break to all manufacturers would cost the state about $40 million a year, much if not all could be made up by increased business activity.
“Some legislators think that when we cut taxes, we’re leaving money on the table.” Ericksen said. “But when we let businesses and individuals keep the money they earn, and spend it as they see fit, they’re going to put it to good use, building their businesses, hiring more people and making our economy stronger. Canceling the tax break is the wrong way to fly.”