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House Bill 678 — Semiconductors, tax incentives

House Bill 678 — Semiconductors, tax incentives

Parrish Miller
February 28, 2022

Bill Description: House Bill 678 would create a special tax carve out for companies that expand semiconductor production in Idaho.

Rating: -2

Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?

House Bill 678 creates Section 63-3622WW, Idaho Code, which would implement a new sales tax carve out for "the purchase or use of construction and building materials" used to expand semiconductor production in Idaho.

The bill's fiscal note suggests that this carve out could result in a tax shift of "approximately $18.4 million each year during the construction phase."

Tax policy should be uniform and should not provide special carve outs for favored recipients, industries, or activities.


Does it violate the principles of federalism by increasing federal authority, yielding to federal blandishments, or incorporating changeable federal laws into Idaho statutes or rules? Examples include citing federal code without noting as it is written on a certain date, using state resources to enforce federal law, and refusing to support and uphold the Tenth Amendment. Conversely, does it restore or uphold the principles of federalism?

House Bill 678 defines the beneficiaries of the tax carve out as "a covered entity that submits a qualifying project outline to the Idaho department of commerce that qualifies for a new, meaningful semiconductor incentive offered by the federal government." 

In addition to shifting the tax burden from favored taxpayers to others, the bill has another problem. It rewards some companies that benefit from cronyism as practiced by the federal government. Idaho’s economic policies should not be based on which companies have the most successful lobbyists in Washington, D.C. 


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