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Mon, Nov 17, 2003

What Price, Dreamliner?

Washington State Questions The Cost Of Attracting Boeing's New 7E7 Plant

Every time you go to the store or plan a purchase for your company or weigh the simple cost of getting from one place to another, you have to make a decision. Is it worth the investment? What's my return?

Folks in Washington state are asking those questions now regarding concessions demanded by Boeing. In return, Washington could land a new Boeing plant that will make 7E7 Dreamliners. But it'll cost the taxpayers an estimated $3.5 billion in revenue the state would receive if it didn't make the concessions Boeing wants.

The Seattle Times reports all but $200,000 of that would come in concessions on the state's Business and Occupancy Tax, much loathed by companies that have facilities in Washington. The cut in B&O taxes wouldn't affect just the new 7E7 assembly plant. It would be applied to Boeing assets statewide.

"We wanted to use the one advantage we have in this game — the fact that Boeing already has a large footprint here," said Sheila Martin, the governor's executive assistant for economic development. "That gives us a lot of leverage over other states."

Washington is also offering Boeing the chance to build its new 7E7 facility without being burdened by property taxes. The company would still have to pay property taxes, but the B&O cut would offset those payments.

"If Boeing does go with Washington, they're basically guaranteed to not have any local property-tax disputes," Seattle tax attorney Norm Bruns said. "In the end, they won't really care what they're assessed at by the local assessor, because whatever it is they get a full B&O credit."

That's huge for Boeing. Unlike other states, Washington taxes the materials and services used to piece together a product. A recent study led by Bill Gates, Sr., shows aerospace, the backbone of the Washington state economy, is overburdened by the B&O tax. Dumping that for all Boeing facilities could indeed prove an offer Boeing just can't refuse.

FMI: www.boeing.com

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