by Joseph Haslag
February 14, 2014
Recently, Boeing was offered $1.7 billion in state tax incentives to locate some, or all, of the 777 model production in Missouri. Governor Nixon asserted that the Boeing tax incentive package would generate $2.9 billion in additional revenues for Missouri. Unfortunately, we do not know the size of the Boeing investment nor are we told what economic model generated these values. In a 10-year production comparison, this study finds that Boeing would have to invest $5.36 billion in order to cover the costs of the tax incentive package. The central question is: under what conditions will the state of Missouri realize an increase in state revenues that exceeds the cost of the tax incentive program? It should be common practice for state officials to rely on a transparent quantitative analysis to assess the net present value of future tax incentive packages.