Tax break for job creation fails in Senate committee

Tax break for job creation fails in Senate committee

by
Idaho Freedom Foundation staff
March 25, 2010
Idaho Freedom Foundation staff
Author Image
March 25, 2010

A joint effort by top Republicans and Democrats in the Idaho House to offer tax breaks to businesses that create new jobs failed to clear a Senate committee due in part to cost concerns.  The Senate Local Government and Taxation Committee is holding onto a corporate income tax break sponsored by House Majority Leader Mike Moyle, R-Star, and House Minority Leader John Rusche, D-Lewiston.

“It was our intent to give a little extra stimulus to create good-paying jobs,” Rusche said.  Employers would have gotten a $2,000 credit for paying new employees $35,000 a year or $16.83 an hour, and offered health insurance benefits.  The House approved the tax credit on a 68-2 vote, but the proposal received no support from the Senate panel.

Sen. Brent Hill, R-Rexburg, the committee chair, said Rusche and Moyle underestimated the potential cost to the state in adding the new tax credit.  “We’re in the middle of a recession,” he said.  Hill said Idaho’s lost 50,000 jobs during the recession, but that those jobs will come back when the economy recovers.  He said if the employers of all 50,000 of those jobs applied for the tax credit, it could cost the state $100 million.  Rusche’s legislation doesn’t list any fiscal impact to state tax revenues.  “This kind of takes the attitude that if they use it they aren’t going to cost anything,” Hill said.  He also said he doesn't think $2,000 is enough of an incentive for employers to bring on new staff for at least $35,000.

Rusche told IdahoReporter.com that the plan expects tax revenues from the new jobs to offset the tax break, and that employers are taking advantage of similar breaks.  Hill’s committee has rejected several other tax breaks that received House approval this session, including breaks for homeless shelters and airplane repairs.

Read the text of Rusche and Moyle’s legislation here.

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