The first term I was in office, we passed some huge multi-million dollar tax exemptions. One for Micron which we were told would keep the critical Idaho Tech Manufacturer from leaving the state. Micron has layed of thousands anyway and soon will likely be gone from the state. The other incentive we passed that year was for Idaho based Albertsons headquarters, who also threatened to leave the state if we did not pass their legislation. They too have sold and now belong to an out of state entity, SuperValue.
I actually helped create some of the "tax accountability" provisions in the Albertson’s bill. With the help of a tax commissioner, Judy Brown from The Idaho Center on Budget & Tax Policy, and a few republican colleagues we created a wage floor and beefed up requirements for employers to offer health insurance benefits because we wanted to create an incentive which guaranteed a return to Idaho’s economy in exchange for the cost of the tax incentives, which ultimately the taxpayers of Idaho would have to fund.
Understandably some rural law makers were concerned that the incentive would apply to giant corporations whose headquarters would be located only in urban areas. Mike Moyle and others crafted the Small Employer Incentive act which mirrored many of the tax accountability provisions of the Albertson’s bill. A little group of small business oriented members of Rev & Tax worked to ensure we did not give away tax dollars to entice a company to come into the state and create low wage jobs which do not benefit but may actually be a drag on the economy as they provide no benefits employees can afford and may leave families in need of food assistance, indigent health care and other state funded services. In essence employers are welcome to create low wage jobs, we simply should never in my opinion be giving tax incentives to companies who do so.
So this week we saw a bill to remove some of the wage requirements of the Small Employer Incentive Act. The change will require a company to first create ten jobs with salaries of almost $20 and hour and then require that all remaining jobs average $15.50 an hour (with no job over $48/hr being included in the averages.) If you do the math an employer could create almost 8 jobs at minimum wage and only two at $47.90 and hour and qualify for major income tax, sales tax and property tax incentives under this bit of Idaho law.
With this mix of wages, how can we be sure this incentive is worthwhile for the tax payers funding these breaks? How can we be sure that our economy and state of Idaho will see a net benefit from this incentive? How much tax revenue will the wages generate to offset the incentives or will this just be a shift to other tax payers?
We better ask these questions. And, in my opinion, need to ask them of every tax incentive we offer. Further, I think we should ask whether the company in question is spending its funds for goods and services in the state of Idaho or has contracts and purchasing agreements mostly out of state. The benefit to Idaho is hugely different in each case. It is time we ask. And with the failure of this summer’s interim committee on tax exemptions to produce any willingness to really examine the economics and costs to tax payers of some of our exemptions, I’d say it is well past time to ask.