Washington’s years-long fight to put sunlight on tax breaks yielded a win for the public last week. The state Department of Revenue agreed to begin disclosing the amount of Boeing’s tax-break savings that were part of multibillion-dollar, tax-incentive packages approved by the Legislature for the aerospace sector in 2003 and 2013.
The aerospace packages are worth nearly $11 billion over 35 years. The biggest share, $8.7 billion, was approved just over two years ago, extending the first round of breaks through 2040.
The latter tax break represented the single biggest tax incentive granted by a state government in U.S. history. It was sold as a way to preserve the Northwest as a premier global aerospace center, and it helped convince Boeing to build its 777X passenger jet in Everett.
The Revenue decision reversed a previous department position. The reversal came after an appeal by The Seattle Times, which challenged the agency’s first interpretation of a 2013 tax transparency law.
A key backer of the transparency law, Sen. Reuven Carlyle, called the ruling a significant win for open government, saying it puts tax transparency on a similar footing to transparency for state spending and political campaign contributions.
“This is not really about Boeing. This is about transparency,” Carlyle said, noting that he had sponsored the latest Boeing tax break in the House.
That literally is true. Revenue says it is notifying some 600 firms by letter that they’ll also have to fill out tax disclosure forms by May 2. Tax breaks enacted or revised since the 2013 transparency law are affected. Data from Boeing for 2014-15 may become public as soon as May.
Carlyle is a Seattle Democrat appointed to the Senate last week to fill a retirement vacancy. He’s long been an advocate for requiring tax breaks to show public benefit that can be measured.
Revenue’s ruling means that in the future, the public will be able to see how much tax benefit a specific company is receiving whenever the new tax break is authorized, based on a promise or goal of economic development or jobs, Carlyle said. The result is that the public can better gauge the value those breaks have for the state.
This doesn’t mean the breaks are wrong. Even Boeing told the Times in a statement it is sure any debate will show the millions in tax dollars generated overall for the state will prove the public value.
The struggle to put sunlight on tax breaks has been a long one and it predates Carlyle’s time in office.
Not until the early 2000s did a law pass that required regular review of tax breaks. That measure set in place a once-a-decade review by the Legislature to ensure that the more than 600 tax exemptions on the books were delivering on their original promises.
That review process has since led to enactment of performance requirements for some new tax breaks. A tax break benefiting pulp mills that reuse waste wood chips to generate heat and electricity is just one recent example.
The policy debate can only get better with better information.
Washington Legislature, tax breaks, Boeing, Seattle Times, Reuven Carlyle, Washington state Department of Revenue, tax transparency, aerospace tax incentives,