Wednesday, July 18, 2007

The Great Tax Debate of 2007

I have a lot of respect for Marty Trillhaase as a coherent and thoughtful editorialist and writer. I haven't always agreed with him, but I think he does his homework.

His commentary about Idaho's tax debate and economic development is worth a read. I am most in agreement with the fact that we need to invest more in education to make that element of our state's offerings the best it can be, and the most attractive to the best kind of companies who need advanced and educated workforces.

The op-ed was emailed to me, so I don't have a direct link, but here is the Post Register main page. This is a Copyrighted editorial of the Idaho Falls Post Register in Idaho Falls, Idaho.

Wednesday July 18, 2007


The great tax debate of 2007

By Marty Trillhaase
copyright Idaho Falls Post Register


After a generation of using Idaho's tax code as an economic development tool, it's time to try something new.

Idaho continues giving businesses income tax breaks for making investments -- even after the feds discarded their larger version of the idea back in the 1980s.

It offered Albertsons a package of tax cuts to retain its corporate headquarters in Boise. The company promptly sold out.

The state gave Micron Technology property, sales and income tax incentives. The company responded by investing in Asia and downsizing its Idaho workforce.

All of which says one thing: Taxes don't drive business decisions. Businesses decide where to operate based on whether they can:

* Hire a qualified, trained work force -- at a reasonable cost.

* Access markets through waterways, railroads, highways and airports.

* Find quality schools that appeal to their employees.

* Acquire a high quality of life.

Perform well on those attributes and your state becomes attractive to a wide range of business opportunities. Unfortunately, Idaho has short-changed schools and higher education. That's left us with an economy that is more dependent on one or two big employers than was the case 20 years ago.

Lawmakers didn't start out re-examining tax philosophy when they set up this year's interim committee. The group began with a more modest focus. Senate tax writing committee members were tired of passing new sales tax exemptions. Most of Idaho's economy is exempt from the tax than is exposed to it. They wanted to review those breaks.

Some members are tired of how lawmakers have begun to tinker with the state income tax code, making it more complicated for taxpayers to navigate.

Both House and Senate tax panels have new leadership, so there's an opportunity to innovate.

Still unresolved from the 2007 session is how Idaho can reduce or eliminate the sales tax on groceries and how it can pay for it. Big business may renew its push for a $110 million personal property tax break -- but lawmakers should ask what tax corporations are willing to pay instead.

But Micron's downsizing adds a new backdrop to these discussions. Not only is there the matter of whether these targeted business tax breaks do any good -- but questions about who pays what tax tend to get more attention when state revenues tighten up.

Idaho has a surplus now, but layoffs -- especially involving high-salaried workers in the Treasure Valley -- mean fewer income tax receipts down the road.

You'll see some long overdue debate on those points when the panel convenes in Boise next month and again in October. Clearly some legislators are getting skeptical about where we've been and where we've headed.

This will be worth watching.