A Closely-Guarded Secret: State Tax Bill for Boeing, Others
Washington lawmakers recently rushed into special session to pass $8.7 billion in aerospace tax breaks in an attempt to land assembly work of Boeing’s next generation 777 airplane.
But how much does Boeing, or any other major company in Washington, pay in taxes? That’s actually a closely-guarded secret. Now, one state lawmaker wants to change that, and a hearing is scheduled for this Friday.
You can look up the Boeing Co. online and find out how much its quarterly profits are, what its stock price is, what sort of dividend it’s paying to its shareholders. But one data point you cannot find is how much this company pays in Washington state taxes.
“We don’t disclose that information,” said Beverly Crichfield, a spokesperson for Washington’s Department of Revenue.
Crichfield says taxpayer information is protected by Washington law even when a company like Boeing is asking for a multi-year, multi-billion dollar tax benefit.
Of course, companies can always waive confidentiality. I asked Boeing to release its state taxes for the past three years. The company's answer was no on the release, and no on a request for an interview on this subject. I got the same answer from Microsoft.
Confidential taxpayer information is available to the governor and a few other elected officials. Rep. Reuven Carlyle, D-Seattle, who chairs the House committee in charge of taxation, is one of them.
When I asked him how much Boeing pays in taxes, Carlyle said, “Under state statute, I am prohibited from answering that question.”
Carlyle doesn’t much like having this proverbial piece of tape placed over his mouth.
“We don’t want to be punitive for companies. We don’t want to be reckless or irresponsible,” he said.
But Carlyle believes lawmakers and the public deserve to know how much a company like Boeing pays in state taxes, especially if that company comes to the Legislature asking for special consideration in the tax code.
Washington is certainly not alone in guarding corporate tax information. Oregon and Idaho do the same. But in Wisconsin, anyone can fill out a form and request a company’s—even an individual’s—net tax information.
“I think there needs to be really a level of caution with releasing specific company information,” said Amber Carter, a tax expert at the Association of Washington Business whose members include Boeing.
Carter argues if tax incentives are crafted on the front end to ensure a return on investment, then how much a company pays in overall taxes becomes irrelevant.
“We are very supportive of having data available to demonstrate the benefit of tax incentives, what we want to make sure though is that the confidentiality and trade secrets of those companies are protected,” she said.
But Richard Pomp, a law professor at the University of Connecticut and an expert on local taxation, doesn’t buy the competition argument.
“When you are a publicly-held corporation receiving billions in tax expenditures, you have no right to privacy at that point,” Pomp said.
Pomp notes that publicly-traded companies already release reams of financial information to comply with federal regulations. So what’s the motivation behind releasing a company’s tax bottom line? Pomp is blunt.
“You’ve got to put some names on it to get the public engaged the way it would if they learn that Boeing pays less taxes than they do,” Pomp said.
Of course, we don’t know what Boeing’s effective state tax rate is. Carlyle plans to introduce corporate tax transparency legislation this January. He hopes to build on a law passed earlier this year that requires new levels of reporting when a company benefits from a specific tax break.
As for the aerospace tax incentives just extended by the Washington Legislature, we do know Boeing would be getting more than half off its bill for those particular taxes.