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Washington Gov. Inslee vetoes manufacturing tax breaks

Boeing has operations in Everett, Redmond and Tukwila. (AP)

Washington Governor Jay Inslee vetoed tax breaks that would have been enjoyed by the state’s largest manufacturers, such as Boeing.

“At a time when homeowners will have to pay more in their property taxes for our children’s education, this part would mean businesses pay less,” Inslee said just before vetoing a portion of the B&O tax segment of the recently passed budget.

“There is a fairness question here that cannot be ignored,” he said. “It cannot be justified nor can it be excused to raise taxes in the billions of dollars on hardworking families while lowering taxes in an unaccountable manner, in the dead of night, in a permanent basis for other businesses.”

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Inslee said that no legislators came to him to ask for assurance that he would not veto the B&O tax provisions for general manufacturers. He said that it looked bad given that the budget was passed days before the end of a third special session and a potential government shutdown.

“If their tender feelings were injured to some degree (by my veto), take a look in the mirror,” Inslee said. “These things can happen when you string things out to just before a government shutdown.”

“This was a bad provision,” he said. “It was grossly unfair to taxpayers, it was done in the middle of the night, it has zero accountability, there’s not a single job that will be produced — that they can prove that will be produced by this.”

Republican Senator Dino Rossi argues otherwise.

“This is quite frankly a pathetic excuse for leadership and for a governor to do this,” Rossi told KTTH’s Todd Herman. “We are talking about tens of thousands of jobs that probably make north of $80,000 a year that will not be created because he vetoed this measure. And it was part of the (budget) deal.”

Rossi also calls foul on Inslee’s claim that no lawmakers contacted him about the B&O tax measure.

“People were contacting him non-stop about this, that this needed to be done,” he said. “It really is an outrage what he has done today.”

Manufacturing tax breaks

The vetoed reduction to the general manufacturing business and occupation tax was similar to past provisions dished out to Boeing. Rossi calls it the “Boeing loophole.” But the recent measure would have extended that loophole to other companies in the state. Its proponents argue that they were designed to spur economic development and job creation.

The governor said that the manufacturers will enjoy the same tax rates they’ve had over the past few years, and that it would have given the incentives to out-of-state oil companies.

Boeing’s past tax breaks were designed to keep 777x manufacturing in Washington. Boeing has still laid off employees — recently at its operations in Everett, Redmond and Tukwila.

In May, Boeing announced it was nixing jobs for 281 workers, including 249 members of the International Association of Machinists and Aerospace Workers and 32 members of the Society of Professional Engineering Employees. In April, Boeing issued 429 layoff notices to union members in the state.

Amid the layoffs, about 1,500 machinists accepted buyouts of their positions at Boeing.

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