Those young upstart millennials, often classified as lazy because they choose quality of life over economic decision making, remind me of Idaho’s predicament regarding how we attract new businesses to the state. We want it all, but we’re not sure we want to work for it.
Think about how often we peddle to our non-Idaho friends and to outside businesses how wonderful the quality of life is here in Idaho. Unfortunately sometimes that’s just not enough. Sometimes we need more in the toolbag than just our quality of life.
So aside from a possible reduction of a corporate tax rate, what is in Idaho’s toolbag to create economic development?
The Boise Metro Chamber of Commerce is pushing for the state to allow local option sales tax in addition to the corporate tax reduction.
Idaho does allow for local option taxing, but in a limited scope. The state allows for the Greater Boise Auditorium District, local vehicle registration fee for Ada County, Nez Perce County, and a local option tax in small resort cities such as McCall, Sandpoint, and Sun Valley.
Additionally, Rep. Marv Hagedorn, R-Meridian, informed me that Idaho already permits local option taxing for property, implying no need for an additional sales tax. “Look, if Boise wants a transit system, do it with a property tax; the infrastructure already exists.”
That’s true. For one thing, local property tax goes to Valley Regional Transit to help fund the basic bus system. Building a more advanced transit system downtown, however, would require the city to support a bond by a two-thirds majority.
Passing a two-thirds majority for a bond is inherently more difficult than a three-fifths (Washington) or simple majority (Utah), especially because property tax is the most hated tax. That we even pass school bonds in this state is incredible.
In addition to the difficult nature of passing anything by a two-thirds majority, the anti-tax frenzy sweeping the country appears likely to keep things at a two-thirds majority. It is part of the reason that some state Legislatures would only allow local option taxing if it were passed by a constitutional amendment.
That type of narrow mindedness is shameful because instead of empowering communities with local control, the Legislature in essence prevents economic growth. Without local option taxing, Idaho cities have more difficulty cultivating attractive work environments or competing with surrounding states.
The Chamber has a leg to stand on here. The resort communities have benefited from their local option taxing and willingly renew them for extended periods of time. The local vehicle registration fee for Ada Country passed by sixty-eight percent. In short, the trial runs implemented in the state demonstrate not only success, but the efficiency of local communities in implementing their own best strategy for economic growth and sustainability.
Still, some raise concerns that local option sales tax would put an undue burden on the state by requiring more of the Tax Commission. That’s only sort of true. The businesses in the resort cities remit their local option taxes directly to the municipality, although they do have the option to contract with the state.
Even if the state did collect the sales tax and re-allocate the local portion back to the municipality, as it does with the Greater Boise Auditorium District, the local municipality pays for it, not the state. In other words, even if Boise enacted a local option tax no one else in the state would actually pay for the cost of reallocating the money back to Boise, unless of course they spent some money in Boise.
The reduction of the corporate tax rate might not pass, but the addition of local option taxing, a positive and proven tool, should be a no-brainer for the state and the Legislature. Those opposed to it simply on grounds of it being taxation fail to grasp the concept of local control. It’s that same local control that gives us the quality of life we try to sell to our friends.
The state can and ought to do more. Namely, it should allow cities to implement local option taxing. Additionally, the state must reevaluate its infrastructure. Our cost of labor may be low, but our workforce with four-year degrees is just as low. It’s time to prepare our state for manufacturing version 2.0, which I’ll discuss next week.
You can reach Tucker at firstname.lastname@example.org or follow him on twitter @Tucker849.