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Does Boeing pay Washington state taxes on the Dreamliners it delivers?
A reader asked this question in the live chat just finished and I didn't give a very defintiive answer. Let me do so here.
Boeing doesn't pay state sales tax on airplanes delivered out of Washington. However, it does pay B&O (Business & Occupation) tax on its gross revenue. We can estimate the revenue from one Dreamliner and therefore the portion of the B&O tax attributable to that.
Boeing pays B&O tax at a reduced rate thanks to the 787 incentive package from 2003.
The regular B&O tax rate for manufacturing is 0.00484. The rate for aerospace manufacturing through 2024 is set at 0.002904. If an airplane is manufactured in Washington, the revenue from the sale is subject to this tax, even if it is sold and delivered elsewhere.
That means that for the early Dreamliners delivered, the state should get about $100 million (not the list price but the approximate true market value after standard discounts) x 0.002904, which is about $290,000. Of course, the first jets were so delayed and so reworked that Boeing had to compensate the airlines, so the earliest ones may have a sales tag lower than $100 milllion.
The above calculation doesn't factor in various tax credits that Boeing (and other aerospace manufacturers) gets from Washington state, including those for computer hardware and software, property taxes on new buildings, and pre-production development expenses on new jets.
*NOTE: The above post was corrected on May 25, 2012 because the original version referred incorrectly to the B&O tax as a "sales tax."
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