Boeing Cuts Jobs, Pays Little Tax, but Takes Taxpayer Money
A few months ago, Donald Trump told an enthusiastic audience of Boeing workers in North Charleston, South Carolina that "jobs is one of the primary reasons I'm standing here today as your President, and I will never, ever disappoint you." Just two weeks ago, Boeing informed workers at the plant that up to 200 of them will be laid off. It’s just another example of the jet maker alternating between wrapping itself in the American flag and firing American workers.
Boeing’s plant in South Carolina had experienced major cutbacks in 2013. It hasn’t been alone. More than a year ago, Boeing sharply reduced jobs in its home base of the state of Washington. The aerospace giant has been reducing staff for months, primarily through buyouts and the attrition.
Let’s be clear. There is nothing wrong with a company paring its workforce. It’s called efficiency. It’s part of competition and wealth creation. Making planes is a competitive industry, and Boeing and all of its competitors must cut costs wherever they can to provide customers with the best product at the lowest possible price. But it’s impossible not to notice the dichotomy: When cutting expenses and jobs, Boeing acts like a tough-minded firm seeking savings. But when it needs government help, it has also been quick to cite its place as a leading American company. Should it be allowed to get away with that two-sided game?
Boeing has been quick to call on government’s help whenever it has needed it. Just a few months ago, the company asked the U.S. Department of Commerce to find its Canadian competitor Bombardier guilty of dumping its C Series plane on the U.S. market at below market costs with the help of the Canadian and Quebec governments. Bombardier has indeed sought and obtained protectionist rents from Canadian governments, billions in government largesse that has allowed it to cut prices and win a contract from Delta Air Lines for the C Series plane. But, other than Boeing itself, Americans have not suffered from Delta’s purchase. Rather, the direct beneficiaries of Bombardier’s backing from government have been an American airline company, its shareholders, employees, and hopefully consumers, who may see some of the benefit of the deal in the form of lower fares and/or better service – courtesy of Canadian taxpayers.
Boeing is used to running to government for back-up. The company has been a steady recipient of government funds, channeled through the Export-Import Bank. In fact, Ex-Im is sometimes referred to as ‘Boeing’s Bank.’ But the plane maker does not restrict itself to the Ex-Im trough. A study released two years ago by the non-profit organization Good Jobs First showed that over the previous 15 years, Boeing was one of five triple dippers – companies that received funds from three sources: state subsidies, as well as federal grants and tax credits, and federal loans, loan guarantees and bailout assistance. In fact, Boeing had received far more state and local subsidies than any other company, at $13.4 billion more than twice as much as second-place Intel.
Meanwhile, the company – the federal government’s second-largest contractor – paid no federal income tax for several of the past 10 years, despite multi-billion dollar profits.
Obviously, there is nothing wrong with having skillful tax lawyers and accountants, and managers who can slice costs to the bone. But what about all the people who are paying for the party, including taxpayers? And if a company is going to cut jobs and pay no taxes, should it be able to ask for and receive government funds with job creation and tax revenue enhancement as the inducement?
If a company is going to wave a scalpel in one hand, should we salute when it waves a flag in the other?
