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Friday, February 25, 2011

CTJ: Boeing Gets $35 Billion Federal Contract, Pays Zero Federal Income Taxes

Citizens for Tax Justice, Boeing’s Reward for Paying No Federal Taxes Over Last Three Years? A $35 Billion Federal Contract:

Despite reporting nearly $10 billion in domestic pre-tax profits between 2008 and 2010, the Boeing Corporation, which was granted a contract worth as much as $35 billion to build airplanes for the federal government earlier this week, did not pay a dime of U.S. federal corporate income taxes during this three-year period.

Boeing 

“Throughout the competition for this lucrative federal contract, Boeing has tried to position itself as the company that supports America,” said Bob McIntyre, executive director of Citizens for Tax Justice. “But its shocking success in avoiding payment of US corporate income taxes tells a very different story.”

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Comments

The CTJ claim is misleading at best. They confuse taxes paid w/ the GAAP concept of accrued tax liability.

Posted by: jpe | Feb 25, 2011 12:03:41 PM

Assuming Boeing did nothing illegal, then the problem, if there is one, lies with the system and not with Boeing.

The article does not cite the source of Boeing's ability to lower its U. S. tax bill, but it may have been something as simple as Tax Loss Carryforwards.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury.

There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

I won't cite the source; if you do not know it you probably should not be reading this Blog.

Posted by: Sid (real one) | Feb 25, 2011 12:07:36 PM

I do not understand CTJ to suggest that Boeing did anything wrong. The question I understand CTJ to be addressing is a policy question: Are US corporations overtaxed? The claim that US corporate tax rates are out of line with international standards has been made repeatedly. The Boeing data suggests that, at the very least, the picture is more complex than the claim would admit.

Posted by: Theodore Seto | Feb 25, 2011 1:05:36 PM

Why rely on the CTJ to scare you, the 10-K annual report filed with the SEC is the source. Boeing has been paying around 30% in income taxes. Note 5 goes through the income taxes paid and the deferred tax liabilities and expenses. Nothing nefarious, just something that every company in America who hires an accountant does. All perfectly legal. Those who don't like it should be lobbying for a simplification of the tax code.

Posted by: Reputo | Feb 25, 2011 1:21:15 PM

Amen, Amen to both jpe and Sid. The left wing, anti Corporate zealots continue to speak out their talking points while ignoring the facts. The question has to be, is there any wrong-doing on the part of the DOD in awarding the contract to Boeing
instead of the outfit in the south that expected to get it. Tell the folks in Washington that Boeing is bad for America; in fact, come here and tell us face to face.

Posted by: Shotgun | Feb 25, 2011 2:20:08 PM

Boeing is headquartered in Chicago. Any questions?

Posted by: Woody | Feb 25, 2011 7:21:23 PM

The really ROI question is "How much did they spend in legal and illegal bribes (aka lobbying and campaign contributions)?"
We are no in one of the most corrupt administrations in modern history. I assume not paying taxes and getting big contracts is a result of the Democrat Crony Capitalism.

Posted by: EvilDave | Feb 25, 2011 8:46:26 PM

I've tried to explain the concept of an NOL and loss carryforwards several times to friends who are upset that corps didn't pay federal taxes over the last year... it's not understood. The time is ripe to go through basic basic corp tax rules for people b/c so many articles like these feed on ignorance.

Just on the 10K, looks like most of their tax expense is deferred, with current relatively small federal tax and maybe refunds from states of a substantial amount (am I reading that right, the 10K's note 5?).

Posted by: L | Feb 26, 2011 9:55:04 AM

If you like Obama-backed labor unions ruining running our schools, you'll like the way they handle military contracts.

Boeing labor union credits Obama for Air Force tanker win

...The selection of Boeing’s KC-767 tanker, announced Thursday by the Air Force, stunned observers on both sides of the high-stakes competition for the $35 billion deal.

Rich Michalski, general vice president of the International Association of Machinists and Aerospace Workers, said he was convinced that EADS was poised to beat Boeing for the coveted deal.

Michalski said the union, which helped carry Obama to victory in 2008 and could be vital to his re-election next year, took its case directly to the White House.

During a conference call with reporters following the Air Force announcement, Michalski commended Obama for responding to the union’s message.

"Anywhere we had a chance to speak to this administration, we did," Michalski said, according to Politico.com. "He listened to the people, and he understood this $35 billion in defense funds will be put to good use."

Michalski was asked why he would praise the president, considering that the White House pledged to stay out of the competition. Michalski responded that he was not naive.

..."It’s a little hard to claim organized labor as your base...if you’re also going to give a $35 billion contract to a foreign company," [Defense analyst Loren Thompson, who backed Boeing’s bid in the competition] told Politico. ....


Posted by: Woody | Feb 27, 2011 9:41:34 AM

What planet must one be from to blame Boeing's tax avoidance on the Obama administration, as a couple of commenters have here? Really-- what is the logical connection there? Anyone?
Hard to say from looking at the 10K exactly what's going on. Part of it's deferral, part of it's tax credits, and neither of these are things to be mad at Boeing about. Part of it may well be offshoring, in which case it really would be time to get mad at Boeing.
But whatever the explanation for Boeing's current low tax rates, bottom line is that they're paying a lot less than 35% and many of their competitors are paying more than they are. It's not a level playing field. The guys who really do pay 35% have a legit bone to pick with Congress. So forget about whether Boeing is to blame-- just close the loopholes that make Boeing's behavior possible!

Posted by: Wow | Feb 27, 2011 10:30:29 PM