Tax Break

Obama touts Boeing, critics lament company tax breaks

February 17, 2012

Obama went to aircraft giant Boeing on Friday to tout U.S. manufacturing and to pitch changes in the U.S. tax code – including slashing tax deductions for corporations that shutter U.S. plants, and a new minimum tax on foreign profits earned in tax havens.
“My attitude is every multinational company should have to pay a basic international tax. You should not have an advantage by building a plant over there, over somebody who is investing here and hiring American workers,” Obama said visiting a Boeing plant in Everett, Washington.

“And every penny of that minimum tax should go towards lowering taxes for companies like Boeing that choose to stay and hire here in the United States of America,” he said.

Ironic, since most business groups are privately groaning about the idea of a basic minimum tax on foreign profits earned in low tax countries like the Cayman Islands.

Meanwhile, a left-leaning tax policy group cried foul about Obama’s choice of venue. By their calculation Boeing has paid no net taxes over the past decade, using legal means that the group says are undermining the integrity of the U.S. tax code.

Citizens for Tax Justice, which is funded in part by labor unions, estimates that Boeing got money back from the U.S. government over the past decade – paying a negative 6.5 percent tax rate, even though it was profitable every year from 2002 through 2011. “Every time (Obama) sees a company that pays no taxes, he wants to be its best friend,” said Bob McIntyre, a veteran Washington D.C. tax activit who helped push changes that led to a 1986 overhaul of the tax code, which raised taxes on corporate America.

McIntyre may have been referring to General Electric, which McIntyre’s group says also has paid no taxes in recent years, and whose Chief Executive Officer Jeff Immelt heads Obama’s advisory “Jobs Council.”

Boeing, for its part, says its effective tax rate over the past several years has been in the high 20-percent to low 30 percent range. One of the biggest tax breaks Boeing takes advantage of is the research and development tax credit, which is widely praised by lawmakers of both parties.

But the company’s estimated tax rate includes taxes it has not paid yet on income still sitting offshore. Companies can defer taxes on profits earned abroad, take deductions for interest but wait to pay taxes until the cash is brought back as a dividend for investors, for example.

A company spokesman said including deferred taxes accounts for Boeing’s large airplane inventory and pension contributions.

“We will pay more cash taxes in the years ahead as we begin delivering our new airplane programs in large numbers and emerge from this period of investment,” the spokesman said.

Comments
3 comments so far | RSS Comments RSS

All the individuals running for the office of President, except Ron Paul, are just throwing out gimicks and pennies to the average citizen and mega bucks to corporations. The America people are tired of this and of the shananigans of both parties to cover up their agenda of giving everything to the Corporations and the rich and absolutely nothing to the average tax payer. WE need a new Independent party with someone who has the guts to do what is right and lead this country. I’m sick of both parties and their covert games.

Posted by JLWR | Report as abusive
 

I thought Romney said companies are people too.. hehe if so why don’t these companies pay taxes. You know what I agree with Ron Paul. The IRS is a shame for America. Dismantle it and recreate a new Revenue service with new laws that matters to the life of people if this era. I believe Obama can do it. I hope he will do it.

Posted by bulldancer | Report as abusive
 

Boeing is one of the worst offenders in terms of “outsourcing” US jobs.

I have lived in the Seattle area for many decades and I remember when Boeing was buying entirely from local aerospace contractors.

Since then all those local contractors have closed down, their high-paying aerospace jobs having been “outsourced” to China.

True, Boeing is beginning to bring assembly jobs back, but only after the incredible disaster of its “plastic” plane showed them they cannot properly control the manufacturing of their product in China and expect things not to go wrong.

There is a good side to this, however, since China has taken the opportunity to learn from Boeing how to construct airplanes, and now they have a burgeoning aircraft industry of their own.

Obama using Boeing as an example of how we should proceed in bringing manufacturing jobs to the US shows that Obama hasn’t a clue as to what he is talking about.

Posted by Gordon2352 | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/