We can do better
By Arlen Wittrock
Idaho, we can do better. Pocatello, we can do better.
A Department of Labor report issued last week shows that Idaho leads the nation with the largest percentage of its workers earning the minimum wage. Another Department of Labor study released in December indicates that workers in Idaho have the lowest average wages, salaries, and take home pay among the 50 states.
A 2012 report from the U.S. Census Bureau ranks Idaho per pupil education spending as the second worst in the nation for the second year in a row. Idaho, we can do better.
Idaho’s current personal property tax system continues to be a major obstacle to attracting those businesses that provide higher paying jobs. The lack of these businesses and their employees results in lower tax revenues for our state, communities, and school districts.
Our current personal property tax system that discourages larger businesses with good paying jobs and benefits from locating here does not need to continue. A newly revised, compromise proposal to phase-out the current personal property tax system over a seven year period is being presented to the Idaho Legislature. Under the proposal, local units of government would have those revenues they currently receive from personal property taxes reimbursed by the state from money received from the growth in revenues to the state’s general fund.
In addition, it is estimated that for every dollar of the personal property tax that is eliminated, the state will receive six dollars in new income through the resulting new investments in equipment and employees.
The personal property tax, as it is currently structured in Idaho and in our Pocatello community, is a major disincentive to economic development and job growth. It discourages many larger businesses that must rely on expensive equipment from considering our Pocatello community as a location for their business.
When we don’t attract those larger businesses with their higher salaries and wages for their employees, we lose tax revenues needed for our schools and for needed local government services.
The personal property tax was originally created to tax household items such as pots and pans. That tax was eliminated long ago. Just over a decade ago, the personal property tax was eliminated on agricultural equipment. Unfortunately the tax remains today on the very types of businesses – those businesses with higher paying jobs — that we most want to attract to our state.
The businesses negatively affected the most by Idaho’s personal property tax are manufacturers, especially those that must rely upon the use of expensive, high tech equipment as their means of production. These are also businesses that could easily locate in one of the other 49 states or elsewhere in the world.
It has been said that these businesses can simply raise their prices to pay for the personal property tax. That is a fallacy. In fact, businesses that must rely on expensive equipment to manufacture today’s high tech electronic components must lower their product prices every year in order to remain competitive in the world market. Fixed costs, such as the personal property tax, make that task more difficult.
For over 30 years I have worked in public affairs and economic development. The business world has changed greatly during that time becoming more and more competitive in a global market. I have been involved in many location decisions made by large companies. A business will not and cannot locate or remain in a community where it is not cost competitive. The personal property tax stands as a major barrier to more successful economic development in Idaho and here in our Pocatello community.
Idaho and Pocatello, we can do better. We can attract more businesses with higher paying jobs. We can generate more needed tax revenues to support government services. We can raise more money to spend on education. We can improve our national rankings when it comes to average wages, salaries, and per pupil education spending. But an important step in doing so is the elimination of the personal property tax and the resulting attraction of more good businesses with higher paying jobs.
Arlen Wittrock of Pocatello represents Southeast Idaho on the Idaho Economic Advisory Council and is a member of the Board of Directors of the Associated Taxpayers of Idaho.