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Idaho’s corporate welfare program survives court challenge

Idaho’s corporate welfare program survives court challenge

Dustin Hurst
August 18, 2016
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August 18, 2016

An Idaho law that allows public officials to award generous tax breaks to businesses that relocate or expand in the state has survived a legal challenge.

On Monday, Idaho Fourth District Court Judge Samuel Hoaglund dismissed a lawsuit, filed by Boise-based human resources firm Employers Resource, because he believed the company lacked standing to bring the case.

“But [Employers Resource] has no standing to challenge the Reimbursement Incentive act because the tax program makes credits available to businesses that meet certain criteria,” Hoaglund concluded.

Employers Resource, founded and owned by George and Mary Gersema, challenged Idaho’s Tax Reimbursement Incentive program after the state Department of Commerce awarded a $6.5 million tax break to the company’s direct competition. That break, awarded to Illinois-based Paylocity, lasts 15 years and rebates the company’s sales, income and payroll taxes.

Hoaglund said the plaintiffs attempted to “manufacture standing” by suggesting the tax scheme could force Employers Resource to react to the giveaway in a certain manner.

George Gersema, the company’s CEO, was not available for comment Wednesday.

Idaho Department of Commerce Director Megan Ronk lauded the ruling in a statement to IdahoReporter.com.

“We are definitely pleased with the judge’s decision to dismiss the lawsuit challenging the Tax Reimbursement Incentive,” Ronk wrote. “This is an important win for the program moving forward and continuing to put Idaho on the map by providing an opportunity for companies to thrive.”

Idaho Freedom Foundation President Wayne Hoffman, who has criticized the program since its inception, lamented the ruling.

“It is the poster child for how special interests who have TRI are making life difficult for mom-and-pop businesses and entrepreneurs and driving up the cost of doing business for those who can least afford it,” Hoffman said.

Lawmakers approved the Tax Reimbursement Incentive program during the 2014 legislative session. Since then, Commerce officials have used it to give tax breaks to some of the nation’s biggest corporations, including Glanbia, Amy’s Kitchen and Dow Chemical.

Ronk and the Department of Commerce have also used the program to subsidize two luxury hotels in the Sun Valley area.

Note: The Idaho Freedom Foundation publishes IdahoReporter.com. 

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