Washington lawmakers recently rushed into special session to pass $8.7 billion in aerospace tax breaks. The aim: to land 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.
Boeing is a company that you can look up 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.
Beverly Crichfield, a spokesperson for Washington’s Department of Revenue, says they don’t disclose that and that 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. But when I asked Boeing to release its state taxes for the past three years, the answer back was no. They also said no to an interview request on this subject. I got the same answer from Microsoft.
Confidential taxpayer information is available to the governor and a few other elected officials. Democratic State Representative Reuven Carlyle is one of them. That’s because he chairs the House committee in charge of taxation.
But when I asked Carlyle how much Boeing pays in taxes he says, “Under state statute I am prohibited from answering that question.”
And he doesn’t like having this proverbial piece of tape placed over his mouth.
“We don’t want to be punitive for companies,” Carlyle says. “We don’t want to be reckless or irresponsible.”
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’s 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,” says Amber Carter, a tax expert at the Association of Washington Business — whose members include Boeing.
She 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,” says Carter. “What we want to make sure though is that the confidentiality and trade secrets of those companies are protected.”
But Richard Pomp doesn’t buy the competition argument. He’s a law professor at the University of Connecticut and an expert on local taxation.
“When you are a publicly-held corporation receiving billions in tax expenditures you have no right to privacy at that point.”
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,” he says.
Of course, we don’t know what Boeing’s effective state tax rate is. Tax committee chair Reuven 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.