Northwest Aerospace News April | May Issue No.14 | Page 59

AEROSPACE FUTURES ALLIANCE SPOTLIGHT
T
hese preferences reduce the cost
of doing business in the state and
improve competitiveness with other
states. According to a Joint Legislative
Audit and Review Committee report
from earlier this year, the preferences
cut the effective tax rate for aerospace
manufacturing firms by 50 percent.
Washington’s effective state and local
tax rate improved from 13th in the
nation to 9th.
The report also found that statewide,
aerospace employment grew by 38
percent since the preferences were
introduced in 2003. Growth was fueled
by our largest private employer, The
Boeing Company, and by over 1,400
companies in the supply chain.
One tax preference has been especial-
ly impactful. A preferential business
and occupation tax rate on aerospace
manufacturing has been an important
tool for strengthening Washington’s
economy since 2003. Between 2013
and 2018, aerospace employers in
Washington claimed an average $116.1
million in annual savings from the
preferential rate.
Companies have invested those
savings back into their businesses and
communities, stimulating $94.4 billion
in business revenue in the state and
employing a total of 223,700 Washing-
tonians as of 2018.
The preferential tax rate enabled
aerospace employers to offer greater
opportunities for workers, including
compensation, benefits, and training.
In 2018, aerospace companies provid-
ed $20.5 billion in labor income and an
average wage of $116,770; far greater
than the average wage of $63,000 for
industries in the state.
AFA has engaged in a near-annual campaign to maintain these tax preferences
for our members. Over the next two years, aerospace companies in Washington
are projected to save $591 million in taxes by utilizing one or more of the credits.
Why, then, has AFA advocated for elimination of the preferential business
and occupation tax rate this legislative session?
AFA Board Member Mike Brown, CEO of Aero-Plastics, Inc. may have said it
best: “The trade-off between tariffs and this tax increase, it’s just a no-brainier.”
In April 2019, the WTO determined that the state’s preferential business and oc-
cupation tax rate for aerospace manufacturing constitutes an unlawful subsidy to
aerospace businesses. As a result of the April ruling, the European Commission
on Trade identified $20 billion in U.S. imports that could receive tariffs as soon
as the second quarter of 2020, including products vital to the Washington State
economy.
APRIL | MAY 2020 ISSUE NO. 14
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