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 59