Shortly after announcing his retirement as head of the Idaho Department of Commerce, Jeff Sayer wanted legislators to hear a single message.
“We do need lower taxes someday, and not today. The return for the state is not lowering taxes,” Sayer recently told the Legislature’s tax working group. “It is investing in talent.”
Naturally, his examples, “investing in our education system, investing in infrastructure,” suggest simply growing government in the manner that the establishment has championed for decades. More of the same policies.
Idaho’s overall tax burden per capita was cited as 41st in the nation, implying Idaho’s tax system treats people and businesses fairly – and therefore people don’t need tax relief.
I see a few problems here.
For starters, the tax burden figure is not adjusted for income. When you look at the totality of state-local tax burden as a share of income, Idaho ranks 24th, according to the most recent data from the Tax Foundation. Of the following adjoining states: Washington, Oregon, Nevada, Utah, Wyoming, and Montana, only Oregon’s burden is higher as a percentage of state income. Wyoming, Washington, and Nevada don’t have an income tax.
I bring up the tax data for two reasons. First, it disproves Sayer’s notion we are a tax haven. Next, it suggests why Sayer’s agency has offered tax incentive packages to selected businesses to relocate to Idaho – Idaho’s basic tax structure is not that competitive with adjoining states. Idaho has high unemployment insurance and, according to a Tax Foundation report on the cost of doing business, Idaho is midpoint or worse nationally for most industries; e.g. capital intensive manufacturers, labor intensive manufacturers, and R&D facilities.
What is Sayer’s logic? Perhaps it’s something close to this: We have low taxes, except we don’t and since we really don’t, we need to hand out tax breaks to businesses to persuade them to move here.
This muddled thinking will not bring prosperity to Idaho. We need clear thinking and wise tax policy not someday, but today.
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