Obama touts Boeing, critics lament company tax breaks
Obama went to aircraft giant Boeing on Friday to tout U.S. manufacturing and to pitchÂ changes in the U.S. tax code â€“ including slashing tax deductions for corporations that shutter U.S. plants, and a new minimum tax on foreign profits earned in tax havens.
â€śMy 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,â€ť Obama said visiting a Boeing plant in Everett, Washington.
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 ofÂ 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 â€“ paying a negative 6.5 percent tax rate, even though it was profitable every year from 2002 through 2011. â€śEvery time (Obama) sees a company that pays no taxes, he wants to be its best friend,â€ť 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 Obamaâ€™s advisory â€śJobs Council.â€ť
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.