Wednesday, February 21, 2007

Tax break is unjustified

One of their own has suggested to Republican state legislators that repealing Idaho's personal property tax on business by 2015 is another break that shouldn't be enacted without reconsidering dozens of other breaks given to business over time.

Sen. Brent Hill, R-Rexburg, cites 80 sales tax exemptions already passed for businesses with a total value of $1.6 billion. The new proposal, vigorously endorsed by the Idaho Association of Industry and Commerce, would eventually be worth $100 million a year in breaks and more over time—an amount lost to local governments but that Republicans claim they would reimburse to local government from the general fund.

Maybe. But political promises today aren't the same as money in the bank tomorrow. Who's to say forgetful or chintzy lawmakers of next year and thereafter wouldn't forget or refuse to appropriate the reimbursement and simply shift the lost-revenue burden to homeowners to make up?

The business lobby's argument that taxes on equipment, machinery, tools and office furniture discourages companies from moving to Idaho is spurious. Idaho, in fact, boasts of having one of the nation's most favorable tax climates for business.

Before legislators leap headlong into another decision creating a tax break that could backfire, a sober examination is needed of other obvious alternatives.

Among them would be to beef up the state income tax, the least regressive of all taxes, enact a real estate transfer tax, and Sen. Hill's proposed review of other tax exemptions for businesses that already costs the state hundreds of millions of dollars in lost revenues every year.

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