``This state is a mess. Elected officials have tried to build the economy by placating the government work force and big unions,'' said Washington NFIB Director Carolyn Logue. ''Washington state does everything it can to slap (entrepreneurial) spirit down.''

http://dailynews.yahoo.com/h/nm/20010324/bs/boeing_seattle_dc_1.html

Saturday March 24 3:49 PM ET
Did Seattle Show Boeing the Door?

By Chris Stetkiewicz

SEATTLE (Reuters) - As Boeing Co. (NYSE:BA - news) gets ready to skip town, Seattle is grappling with the haunting accusation that its own bad business practices forced its most venerated corporate citizen out the door.

Boeing denies it, along with many Washington state politicians and business leaders, but there is little question among free market advocates that the aerospace giant was slowly squeezed out by high taxes, snarled traffic and red tape.

``I don't think we should be surprised. Studies have shown that (the area) is not receptive to business, but the legislature and governor really haven't done anything about it,'' said Dann Mead Smith, who heads the Washington Institute Foundation, a conservative think-tank.

In announcing plans to move its corporate headquarters to either Chicago, Dallas/Ft. Worth or Denver, 86-year Seattle resident Boeing cited geography as its primary reason, with the central United States closer to major airline customers, Wall Street bankers and federal regulators in Washington, D.C.

But Boeing executives for years have griped about costly environmental rules, lengthy building permit processes and labor costs, threatening to take their business elsewhere if the problems were not fixed.

Litany Of Complaints

In 1991 then Chief Executive Frank Shrontz warned the Northwest could become an aerospace ``rust belt'' with abandoned factories and job losses unless business costs came down.

``The necessity to stay competitive in the world market demands that we consider these costs as a significant factor in our plans to accommodate additional growth,'' he said.

In 1993, another warning came from Deane Cruze, then a senior vice president of operations.

``It was clear two years ago that our state was falling out of step with a world shaped by global competition, but what has been done? Nothing,'' Cruze said.

And most recently in 1999, former Chief Financial Officer Debby Hopkins said Washington ranked 16th out of the 27 states in which it operated as a place to do business, which cheap power costs overwhelmed by high fees, taxes and labor costs.

``When you add it up, it's not the best environment for business,'' Hopkins said.

Interestingly, all three speeches were delivered at Greater Seattle Chamber of Commerce (news - web sites) events, though Chamber officials say the local business climate, while uneven, was not to blame for Boeing's exit.

``That is not the reason the company decide to leave. I have stared them in the eyeball and pushed them on that point and I believe them,'' said Bob Watt, president of the Chamber.

Boeing has angered its unions and some local officials by slashing its payroll and selling off underutilized plants and by talking about shifting wing production for an all-new 747X superjumbo jet to Japan and consolidating its Washington state jet assembly sites.

With rival Airbus Industrie ARBU.UL chipping away at its once dominant share of the commercial jet market, Boeing has vowed to get leaner, more nimble and more diversified in order to boost profits and shareholder returns.

WAKE-UP CALL?

Boeing's goodbye could actually improve local business conditions if local officials heed what seems like a screeching wake-up call, Watt said.

And after all, only 500 of 1,000 headquarters employees will be heading east -- some 78,000 rank-and-file employees are staying in the state.

But Watt conceded that clogged highways and steep operating costs offset the educated work force and absence of corporate or personal income tax in Washington state.

``There's no question that if you are a company looking to relocate today, you are worried about transportation in Seattle and Washington state. If you want to move anything, you probably don't want to be here,'' Watt said.

Watt said he knew of several companies that shunned Seattle in the last three years, taking some 5,000 jobs elsewhere.

Privately, some Boeing and government officials say business costs, primarily fees and taxes, did play a big role in Boeing's decision to leave.

Many business leaders were far less restrained. The local chapter of the National Federation of Independent Business blamed Washington's fat minimum wage and unemployment insurance costs plus prolific and onerous health and ergonomics rules for running Boeing out of town.

``This state is a mess. Elected officials have tried to build the economy by placating the government work force and big unions,'' said Washington NFIB Director Carolyn Logue. ''Washington state does everything it can to slap (entrepreneurial) spirit down.''

-- Anonymous, March 24, 2001

Answers

I am just glad the Taxpayers will not be footed the bill for this move (major eyeroll). That be the reason and means by which this be even possible BTW.

-- Anonymous, March 25, 2001

http://www.boilermakers.org/6-Reporter/6- Taxes/V39N1tax4.html

How tax subsidies hurt you

You may believe these tax breaks for corporations don't affect you, but they do. The Citizens for Tax Justice estimates that over the seven-year period from 1994 to 2001, business meals and entertainment write-offs alone cost the U.S. Treasury $44 billion.

"Budgeting is about making choices," explains Citizens for Tax Justice Executive Director Robert McIntyre in a report on corporate welfare. "If Congress decides to spend $44 billion to subsidize fancy dinners and playoff tickets for business executives, that's $44 billion that is unavailable to pay for school lunches or foodstamps. If $95 billion is budgeted to help multinational corporations avoid taxes, that's $95 billion that can't be used to improve education or improve law enforcement."

In some cases, business subsidies can be so large that they cause large economic shifts. That was the case from 1981 to 1986 in the real estate industry, where lavish tax subsidies caused a huge wave of excess office construction around the country. In a 1991 letter, the Treasury Department called this gross overbuilding "one of the primary causes of the savings and loan crisis."

Why corporations pay less

To those familiar with how Washington works, it should come as no surprise that corporations get enormous tax breaks. They get them the old fashioned way: they buy them.

In the 1997-98 campaign cycle, wealthy individuals and corporations donated more than $175 million in soft money to political parties in addition to the hundreds of millions of dollars that corporate PACs and wealthy individuals donated directly to candidates.

George W. Bush has already collected over $67 million for his presidential campaign from corporation executives and other wealthy backers. Wealthy executives of the Microsoft Corporation, now being sued by the Justice Department for monopolistic restraint of trade, are among Bush's top donors.

But corporations don't just donate money and hope candidates will support their positions. They also spend hundreds of millions on lobbyists each year. The Federal Election Commission reports that corporations spent over $620 million on lobbyists in 1998 alone.

In Washington on $10 Million a Day, investigative reporter Ken Silverstein estimates there are as many as 80,000 lobbyists working in Washington on any given work day -- that's about 150 lobbyists for every member of Congress. Many corporations regularly spend more than a million dollars a year on lobbyists.

And it pays off. For example, in 1996, Boeing paid 70 lobbyists a total of $5.2 million. No doubt those lobbyists were instrumental in helping Boeing get such a great tax deal that year. For 1995, Boeing not only did not pay any federal taxes, they got a $33 million rebate from the U.S. Treasury, making their effective tax rate an astonishing minus nine percent.

Apparently, lobbying pays excellent dividends.

-- Anonymous, March 25, 2001

Remember this from 20-25 years ago: "Will the last one leaving Seattle please turn out the lights". Closely followed by the the emergence of Microsoft, Starbucks, Curt Cobain, soaring property values, Sleepless in Seattle and traffic jams.

When was the last time Seattle was elected to be one of "America's most liveable cities"? Seattle may well benefit by the timely exit of a million or so people.

-- Anonymous, March 25, 2001

CPR:

Some parts of the article may have some validity, in my experience.

For example:

But Watt conceded that clogged highways and steep operating costs offset the educated work force and absence of corporate or personal income tax in Washington state.

``There's no question that if you are a company looking to relocate today, you are worried about transportation in Seattle and Washington state. If you want to move anything, you probably don't want to be here,'' Watt said.

The people at Boeing should be planning with at least a 10 or 20 y window. If the transportation problems increase at the same rate that they have in the last 20y, nothing will be moving. It would be a difficult problem to solve, because of the lack of solid land between the mountains and the sound. It is a beautiful place to live but that doesn't help much if it takes a weeks vacation to get out of town.

They could move north into Skagit and Whatcom counties but these would be too isolated. They can't move to central Washington; much of that makes Rudosa look like a tropical paradise.

My guess is that they will slowly downsize by replacing Seattle facilities in other localities. I would think that Texas, Oklahoma and Kansas would be good choices.

Time usually proves me wrong, so we will see.

Best Wishes,,,,

Z

-- Anonymous, March 26, 2001