May 8, 2005 in Idaho

Major tax breaks

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Here are the major tax breaks for business the Idaho Legislature enacted this year:

“HB 306, the Corporate Headquarters Incentive Act

This bill, proposed by Gov. Dirk Kempthorne, grants an array of tax breaks, including income tax credits, sales tax rebates and state-paid property tax abatement, to companies bringing in at least 500 jobs averaging $50,000 a year or more and investing $50 million in new facilities in the state, all within five years.

Beneficiaries: Albertson’s Inc., the Boise-based grocery chain that’s considering consolidating many of its operations in Boise or elsewhere, and other big, Fortune 500-type companies looking to relocate or substantially expand in Idaho.

Cost: For a company bringing in 500 jobs, the cost to the state for the tax breaks would be $1.8 million in the first year, but that would be offset by an estimated $3.1 million in additional state tax gains, for a net positive impact of $1.3 million.

“HB 323, the Small Employer Incentive Act

At the urging of lawmakers, the governor added this scaled-down incentive bill for smaller employers who create as few as 10 new jobs paying at least $40,000 a year. Companies would get income and sales tax breaks, plus local county commissioners could opt to give them property tax abatements.

Beneficiaries: Any company that meets that job-creation threshold plus invests $50,000 in new facilities and equipment for each of the newly added employees within five years.

Cost: For 10 new employees, the breaks would cost the state $17,188 in the first year, but the state would gain an estimated $83,062 in new taxes, for a net gain of $65,874.

“HB 261, the research and development sales tax exemption

This measure, which was proposed by Micron Technology Inc., would grant a sales tax exemption for the lease, rental, purchase, sale or storage of property used primarily in research and development, including anything used in high-tech “clean rooms.”

Beneficiaries: Micron is expected to be by far the largest beneficiary, but other companies that do research and development also could qualify for the exemption.

Cost: The cost to the state is estimated at $6.8 million to $7 million a year, with most of that going to Micron.

“HB 319, the Micron property tax cap

This bill, again proposed by Micron, would exempt from property taxes any property owned by a single business or individual that exceeds $800 million in value within one county. Micron’s Boise headquarters and plant doesn’t exceed that level now, but has in the past and is expected to again. The property owner would qualify for the cap only if it employed at least 1,500 people and made $25 million in capital investment in the county in the year prior to claiming the exemption. The bill is retroactive to Jan. 1, 2005.

Beneficiaries: No one qualifies now, and only Micron is anywhere near qualifying in the future.

Cost: There’s no cost to the state, but the rest of the property taxpayers in the county where the exemption is claimed would have to pay more to make up for the exemption.

“HB 110, the alternative energy exemption

Machinery or equipment used in alternative methods of generating electricity – including wind power, fuel cells, geothermal, co-generation and low-impact hydro – would be exempt from sales tax under this bill. The measure was sponsored by Rep. George Eskridge, R-Sandpoint, and Sen. Brent Hill, R-Rexburg, who co-chaired a joint legislative interim committee on energy issues.

Beneficiaries: Only companies that develop an alternative energy generating facility that produces at least 25 kilowatts of electricity would be eligible. One eastern Idaho firm, Ridgeline Energy, which describes itself as a “utility scale wind developer in Idaho,” actively promoted the bill and praised its passage, and said it plans to use the exemption and develop a wind energy plant in Idaho.

Cost: The cost to the state is estimated at $2.13 million a year. The bill had an emergency clause making it effective immediately upon passage.

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