Friday, January 14, 2005

Tax giveaways Idaho doesn't need


Clearer thinkers in the Idaho Legislature surely will refresh Gov. Dirk Kempthorne's memory of the wonderfully efficient refrain, "If it ain't broke, don't fix it."

Yet, Kempthorne is advancing the theory that Idaho's growing economy and expanding work force need an economic cure-all—a brace of tax incentives to lure industries with high-paying jobs—after he boasted that the state's economy is flourishing.

How curious.

In his State of the State address, the governor painted a joyful portrait: personal income growing faster than any state in the Northwest, Idaho's gross product outpacing the nation's rate and a 19-month unemployment rate lower than the nation's.

Then this: "We've been successful in attracting new businesses (while) retaining existing companies..."

So, if Idaho is prospering, how come in the next breath the governor proposes a breathtaking, economically nonsensical tax giveaways for companies promising to invest $50 million in new structures and create 500 new jobs that pay $50,000 per year in five years?

Among the governor's charitable tax breaks: doubling tax credits for qualified companies, job tax credits, income tax credits for property improvement, delayed property taxes on new construction and delayed sales taxes on construction materials.

If lawmakers don't see this scheme as wholly unnecessary and beneficial only to particular companies, and they buy into the governor's voodoo economics, Idaho would thereafter endure more shrinkage of tax revenues and another budget handwringer.

While privileged corporations avoided taxes, what of Idaho businesses and individual taxpayers that carry their share of state costs?

Of course, Kempthorne's plan would stick John and Jane Q. Public and companies that have long sustained their investments and operations in Idaho with taking up the slack.

Despite a few notable exceptions in tax credits that restore economic vigor (such as tax credits for huge new auto plants in Kentucky and South Carolina), tax breaks are not what they seem.

Consider the largesse slathered on the world's largest retailer, Wal-Mart, notorious for low wages and buying many of its products from low-wage China factories.

Among a series of studies into tax incentives, Good Jobs First and the Institute on Taxation and Economic Policy found that in just 84 of Wal-Mart's more than 3,000 centers included in the analysis, the firm received an estimated $624 million in public subsidies of various types. The total tax breaks for all stores must be staggering.

In exchange for breaks, Wal-Mart drives locally owned, taxpaying retailers out of business and their workers onto unemployment lines.

The governor's wrong-headed tax cuts several years ago led to the state's worst budget crisis.

Hasn't he learned?




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