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The Warped US Tax System: Taxpayers Subsidize Their Own Destruction

One of the more interesting battles being waged right now is between labor and Boeing, the aerospace and defense corporation. The National Labor Relations Board accuses the company of illegally retaliating against its largest union when it decided in 2009  to put a second 787 Dreamliner assembly line in a nonunion plant in South Carolina.

Originally, Boeing intended to construct the Dreamliner in Washington, but only if the state approved a twenty-year, $3.2 billion package of tax credits. Officials ultimately conceded, but Boeing took its toys and went to play elsewhere anyway when South Carolina lured it across state lines with the promise of a whopping $900 million subsidy package a k a taxpayer dollars, and a nonunion plant to set up shop in.

Boeing also happens to be one of the shining examples of government-subsidized businesses that pay meager amounts of state and local taxes. In 2010, Boeing received a net tax refund of $137 million from state and local governments despite earning more than $4 billion in pretax profits.

The company has always defended these kinds of practices by claiming it’s a great jobs generator. Of course, one need only glance at South Carolina’s jobless statistics, which are well above the national average, to see that claim stands on shaky legs. In a state that provides some of the least generous jobless benefits in the union, it’s difficult to see just how shelling out massive subsidies to an anti-union company like Boeing provides for a majority of South Carolinians.

Endless mini-bailouts that the state calls “subsidies”—some of them deemed illegal—and harsh austerity measures won’t pay off for citizens, or corporations, in the long run. South Carolina legislators plan to cut $700 million from the state budget by hacking away at Medicare and education programs. Meanwhile, the detrimental ripple effects of education cuts are likely to far outweigh any temporary benefits the state might have gained from luring Boeing into its borders. Citizens will obviously suffer, but so too will business. For example, Boeing isn’t going to be super-eager to hire the products of a failing South Carolinian educational system to work in its plants.

Conservatives constantly exalt the glories of the free market, except there’s nothing free about taxpayers subsidizing the anti-union behavior of companies like Boeing. This kind of corporate welfare system is rigged to force citizens to bankroll their own destruction. If every company followed the Boeing model, there would be no unions, no collective bargaining and no assurance for the majority of poor workers that they can have any protection from their corporate overlords.

Quite simply, Boeing wouldn’t be able to prosper without the state, and by default, its taxpayers. It’s time they show a little respect for the people assisting the company’s copious growth.  

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Allison Kilkenny

Allison Kilkenny is the co-host of the progressive political podcast Citizen Radio ( and independent journalist who blogs at Her work has appeared in The American Prospect, the L.A. Times, In These Times, Common Dreams, Truthout and the award-winning grassroots NYC newspaper The Indypendent.

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