The Senate of Washington State, where Boeing’s headquarters and main factories are located, repealed the tax break for aerospace manufacturers that was at the center of the trade dispute between the European Union (EU) and the United States over subsidies granted to their respective aviation industries. Airbus and the EU had qualified the tax preference as “illegal subsidies”.
On March 12, 2020, the Senate Bill 6690, adopted at 45 votes against 4, put an end to a 40% tax break to aeronautical companies. The measure that was set up 16 years ago mainly benefitted Boeing, whose two main assembly plants are situated in Washington State (Renton assembling the 737 MAX and Everett with the 787, 777, 767, 747). Tax cuts and incentives were even broadened in 2013 to (successfully) attract the production of the 777X. The cut would have reportedly saved the manufacturer $230 million in 2018 only.
The bill has yet to be approved by the state governor Jay Inslee.
Boeing, who is behind the bill initiative, hopes to escape from the World Trade Organization (WTO) that could approve trade retaliation by the EU. In October 2019, the United States was authorized to impose a 15% tariff on European goods, citing illegal subsidies to Airbus.
However, the tax cut could be reinstated if the U.S. and EU fail to come to an agreement over their trade dispute.
While it welcomed the Washington State Senate vote, Airbus’ crusade does not end here. According to the European manufacturer, its counterpart still profits from tax breaks and subsidies in other states (including Kansas) as well as on the federal level.