Boeing is top dog for state, local tax breaks

March 17, 2015

By Curtis Tate March 17, 2015

Boeing is the biggest winner of state and local tax incentives, receiving more than $13 billion of them, according to a nonprofit watchdog group that tracks the subsidies.

The Boeing subsidies come primarily from just two states, Washington and South Carolina, according to decades of data compiled by Good Jobs First. The Boeing subsidies make Washington state the second-leading provider of tax incentives behind New York.

Many of the Boeing subsidies are tied to its commercial-aircraft manufacturing. But the company is also a federal contractor, landing major projects such as the Air Force's $35 billion order for new refueling tankers being built in Everett.

Good Jobs First tracks federal subsidies and loans to major corporations, and Boeing again comes up a winner, receiving more than $450 million in subsidies and more than $64 billion in loans.

"Boeing is playing the subsidy game at all levels of government," said Phil Mattera, research director for Good Jobs First.

States use tax incentives as an economic tool to lure new jobs or keep existing ones. But fiscal watchdogs criticize the practice, which they say doesn't always deliver on its promise. Sometimes, states spend tens or hundreds of millions of dollars, only to see the plants close and the jobs they supported vanish.

Good Jobs First tracks "megadeals," packages of incentives worth $60 million or more. The deals often reach into the hundreds of millions of dollars and a few top $1 billion.

According to the group's data, Florida is a top giver of incentives to biomedical research. Recipients of more than $1 billion in total subsidies include the Scripps Research Institute, the Sanford-Burnham Medical Research Institute, the Max Planck Florida Institute and the Vaccine & Gene Therapy Institute.

Auto manufacturers receive a good chunk of state and local subsidies from traditional carmaking states like Michigan, as well as newer ones such as Kentucky, Mississippi and Georgia.

Tax incentives have played a role in making Kentucky the third-largest auto-manufacturing state behind Ohio and Michigan.

Toyota has received nearly $300 million in state and local tax breaks since opening a plant in Georgetown, Ky., in 1985. The plant employs 7,000 and assembles the popular Camry.

Ford got $240 million in state and local subsidies in Kentucky to support two assembly plants in Louisville that build small and large SUVs and heavy-duty pickup trucks.

Mississippi found more than $1.6 billion in total to lure Nissan and Toyota assembly plants. Georgia won a Kia Motors plant with more than $400 million in subsidies.

Tech companies get big breaks, too, and from a state more associated with textiles than with technology. Apple and Google received $320 million and $250 million, respectively, to build data server farms in North Carolina.

But the state is a prominent example of when subsidies don't work. Four years after giving Dell a $280 million incentive package for a computer-assembly plant near Winston-Salem, the plant closed and 900 workers lost their jobs.

Some states use tax incentives to lure companies from other states. Georgia enticed NCR, the cash-register manufacturer, to move from its longtime headquarters of Dayton, Ohio, with a $110 million package.

In other examples, whichever state offers the best package gets the jobs. California lost a Tesla Motors electric-car battery manufacturing plant to Nevada, which offered incentives worth nearly $1.3 billion.

South Carolina beat Washington state for an assembly plant for Boeing's 787 Dreamliner. The North Charleston, S.C., plant has received more than $1 billion in incentives.

But Washington's $12 billion in Boeing subsidies could keep more jobs from flying south.