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By some accounts, Boeing is the most subsidized company in the world. https://globalnews.ca/news/3773916/bombardier-boeing-subsidies/ https://globalnews.ca/new

By some accounts, Boeing is the most subsidized company in the world. https://globalnews.ca/news/3773916/bombardier-boeing-subsidies/ https://globalnews.ca/news/3773916/bombardier-boeing-subsidi... https://www.forbes.com/sites/taxanalysts/2014/03/14/where-is-the-outrage-over-corporate-welfare/#2b698cd927dd https://www.forbes.com/sites/taxanalysts/2014/03/14/where-is...

magila 9y ago
You have to be careful when you see claims of a company receiving $x in subsidies. There is often some questionable accounting which going into computing those numbers. For example, the $64 billion figure from the headline of the first article appears to be mostly from loan guarantees. Loan guarantees are definitely a form of subsidy, but computing their value is not trivial. You need to figure out what the rate would have been without government backing and compare that with what the actual rate was. Simply taking the notional value of the loan, as was done to get the $64 billion figure, vastly overstates the magnitude of the subsidy.
- seanmcdirmid 9y ago
  One of my teachers in high school was complaining about Boeing being exempt from Washington state sales tax for the sale of...airplanes. Is that a subsidy? I wouldn't count it as such.
  - wbl 9y ago
    It is. It's a targeted expenditure (vs. a lower sales tax rate overall) but IANAL.
    - seanmcdirmid 9y ago
      For a company with international sales, sales tax (and VAT) should be handled in the district where the sale occurs, not where the product is manufactured. The big problem with the USA is that it doesn't have a VAT system in place to make it all work out equitably.
      - JDShu 9y ago
        Unless I'm misunderstanding your point, I think it still works out equitably regardless of the existence of a VAT system.
  - barrkel 9y ago
    All tax breaks are subsidies.
    - tim333 9y ago
      Well, it makes a difference whether the government is giving money to the company or visa versa.
    - dmix 9y ago
      In effect maybe, but this isn't considered a subsidy on paper though... from my understanding the distinction is "giving" is a subsidy vs "not taking" is a tax break?
- wahern 9y ago
  Yep. Every country with an advanced export industry has an Export-Import Bank. Small countries making capital purchases of hundreds of millions of dollars wouldn't be able to secure the financing, otherwise; at least, not at any reasonable rate. The fact that the U.S. Export-Import Bank has never had a net loss (at least, none of note AFAIK) is really all we need to know about how much of an unfair subsidy they're providing: none. IOW, they aren't guaranteeing transactions that aren't economically viable. It's just that, say, Ethiopia has zero chance of not getting gouged by major American or European banks. Among other things, big western banks don't have any appetite for dealing with the risk--currency exposure, foreign liquidation headaches. Even though ultimately they could recover their losses, it would ruin a few quarters of profits and throw their shareholders into fits. When people argue that Boeing exports make up the bulk of the Export-Import Bank's financing, well, d'uh. For political reasons the bank likes to sell itself as supporting small business, but the fact of the matter is that the global banking industry is competitive enough to finance smaller purchases. The economic function of an Export-Import Bank is to improve the transactional efficiency at the very high-end of the market. More importantly, as an advanced economy the U.S. primarily exports advanced (i.e. extremely costly) capital goods. Some national export-import banks are primarily in the business of funneling subsidies to domestic exporters. You can tell because they hide huge losses. But that's just not the case in the U.S., Canada, or most of Europe.
  - Tyrek 9y ago
    That's kind of like arguing that because housing prices have never(!) gone down (pre-2008), housing prices will never go down, and therefore underwriting any mortgage carries 0 risk. It's simply bad math.
    - wahern 9y ago
      I'm not saying it's 0 risk. My point was merely that given the absence of such losses--losses that similar banks (e.g. in China) regularly sustain to support blatant industrial subsidies--then it's a stretch to call it a subsidy given the loaded meaning of that word in both politics and international affairs. Yes, technically it's a market intervention. But unless someone is prepared to say that the Export-Import Bank is creating a bubble in exports, driving more exports than is economically sustainable, then criticism of the Export-Import Bank is unwarranted. Some economists are prepared to say that. But I think most economists--the ones who aren't ideological radicals--would say that it's a complex question, admit that it's probably serving some useful economic function, and shrug their shoulders. And of course most other people in the industry would absolutely say that it serves useful and necessary function.

magila 9y ago

You have to be careful when you see claims of a company receiving $x in subsidies. There is often some questionable accounting which going into computing those numbers. For example, the $64 billion figure from the headline of the first article appears to be mostly from loan guarantees. Loan guarantees are definitely a form of subsidy, but computing their value is not trivial. You need to figure out what the rate would have been without government backing and compare that with what the actual rate was. Simply taking the notional value of the loan, as was done to get the $64 billion figure, vastly overstates the magnitude of the subsidy.

seanmcdirmid 9y ago
One of my teachers in high school was complaining about Boeing being exempt from Washington state sales tax for the sale of...airplanes. Is that a subsidy? I wouldn't count it as such.
- wbl 9y ago
  It is. It's a targeted expenditure (vs. a lower sales tax rate overall) but IANAL.
  - seanmcdirmid 9y ago
    For a company with international sales, sales tax (and VAT) should be handled in the district where the sale occurs, not where the product is manufactured. The big problem with the USA is that it doesn't have a VAT system in place to make it all work out equitably.
    - JDShu 9y ago
      Unless I'm misunderstanding your point, I think it still works out equitably regardless of the existence of a VAT system.
- barrkel 9y ago
  All tax breaks are subsidies.
  - tim333 9y ago
    Well, it makes a difference whether the government is giving money to the company or visa versa.
  - dmix 9y ago
    In effect maybe, but this isn't considered a subsidy on paper though... from my understanding the distinction is "giving" is a subsidy vs "not taking" is a tax break?
wahern 9y ago
Yep. Every country with an advanced export industry has an Export-Import Bank. Small countries making capital purchases of hundreds of millions of dollars wouldn't be able to secure the financing, otherwise; at least, not at any reasonable rate. The fact that the U.S. Export-Import Bank has never had a net loss (at least, none of note AFAIK) is really all we need to know about how much of an unfair subsidy they're providing: none. IOW, they aren't guaranteeing transactions that aren't economically viable. It's just that, say, Ethiopia has zero chance of not getting gouged by major American or European banks. Among other things, big western banks don't have any appetite for dealing with the risk--currency exposure, foreign liquidation headaches. Even though ultimately they could recover their losses, it would ruin a few quarters of profits and throw their shareholders into fits. When people argue that Boeing exports make up the bulk of the Export-Import Bank's financing, well, d'uh. For political reasons the bank likes to sell itself as supporting small business, but the fact of the matter is that the global banking industry is competitive enough to finance smaller purchases. The economic function of an Export-Import Bank is to improve the transactional efficiency at the very high-end of the market. More importantly, as an advanced economy the U.S. primarily exports advanced (i.e. extremely costly) capital goods. Some national export-import banks are primarily in the business of funneling subsidies to domestic exporters. You can tell because they hide huge losses. But that's just not the case in the U.S., Canada, or most of Europe.
- Tyrek 9y ago
  That's kind of like arguing that because housing prices have never(!) gone down (pre-2008), housing prices will never go down, and therefore underwriting any mortgage carries 0 risk. It's simply bad math.
  - wahern 9y ago
    I'm not saying it's 0 risk. My point was merely that given the absence of such losses--losses that similar banks (e.g. in China) regularly sustain to support blatant industrial subsidies--then it's a stretch to call it a subsidy given the loaded meaning of that word in both politics and international affairs. Yes, technically it's a market intervention. But unless someone is prepared to say that the Export-Import Bank is creating a bubble in exports, driving more exports than is economically sustainable, then criticism of the Export-Import Bank is unwarranted. Some economists are prepared to say that. But I think most economists--the ones who aren't ideological radicals--would say that it's a complex question, admit that it's probably serving some useful economic function, and shrug their shoulders. And of course most other people in the industry would absolutely say that it serves useful and necessary function.