Fix the Tax Code

The recent layoffs at Micron have hit a nerve in Boise. Micron Computers is one of our largest employers here. Their 10% layoffs mean around a thousand lost jobs. In a well-peopled area with low unemployment (less than 4%), 0.2% of the Treaure Valley being put out of work is bad, but it’s managable. Julie Fanselow thinks it’s time for a shift in policy:

But the biggest lesson we need to take from this is that it’s ridiculous to shortchange Idaho families, schools, and small business owners by giving huge tax breaks to corporations. No matter how many times the GOP smooches their butts, big businesses will do what they want. Let’s focus on developing small companies – not corporate behemoths that demand discounted meals at the public trough, then skip out on the bill.

There are two big poitns of disagreement here. First of all, it’s not the job of our state to build small businesses or large corporations (that’s the job of private enterprise.) Secondly, part of our state’s problem is that we don’t have that great of a business environment according to the National Tax Foundation, Idaho ranks #32 in the nation in Business Tax Climate. If you rank #32 in the nation, you’re doing some things plain wrong.  To make matters worse, here’s where are neighbor states rank: Montana: #6, Wyoming #1, Oregon #10, Washington, #11, Nevada #4, Utah #16. You want good jobs, fix the tax system.

This is also key to building up small businesses. We want small businesses in our state, we have a funny way of showing it. We throw down a monstrous 8-bracket tax code at them which eats up their profit. We tax their Capital Gains should they choose sell the business at the normal state income rate. If you want small businesses and to attract larger businesses without having to bribe them, simply get a reasonably crafted tax code in place.

The federal tax code has to be reformed as well. With the current income tax, we add an additional cost to manufacturers to make goods in this country as they have to pay Corporate Income Tax and Payroll Tax in the price of the goods they make. Any jobs lost in Boise will be filled overseas for sure.  With the Fair Tax, we’ll get better jobs and our manufacturing in America because with the elimination of Corporate Income Taxes and the Payroll Tax,  the cost of manufacturing in the US will drop significantly as will the foreign edge.

I will say that it’s not the wisest thing in the world to plan on being part of a corporation all your life. They restructure and change all the time. The wisest course is to find yourself employed by yourself. That’s the goal I’m working towards. I’ll let you know when I get there.

Update: Binky Boy stands up for special interests business tax cuts attacking my support for a “flat tax.” Problem is that I didn’t say “Flat Tax.” I said “Fair Tax” which would eliminate personal and corporate income tax, payroll taxes. A flatter state income tax would help matters though and I’d point out that Wyoming has no income tax, but somehow they get companies to move there and your average Wyomian earns more than your average Idahoan. Colorado has a 4.63% Flat Tax rate and your average Coloradan earns $8,000 more than your average Idahoan.