Idaho’s Division of Financial Management (DFM) released its latest economic forecast today and the news is gloomy. The probably of slipping back into a national recession is higher than it was just three months ago. “In the previous (July) forecast, the probability of the economy slipping into a recession was 25 percent,” says Derek Santos, chief economist. “The probability of a recession was raised to 40 percent in the current forecast.”
Santos writes the state’s economic recovery stalled more than expected this last spring and summer. Advancements in job creation are now predicted to be slower through 2014. For example, Idaho’s non-farm employment was forecast to grow two percent in the second quarter of this year, but it didn’t.
“The economic recovery had its second anniversary this summer”, says Santos. “Instead of being a milestone to celebrate what has been achieved, it served as a reminder of how much more is to be accomplished. The economy should be further along the road to recovery than it is.” Continue Reading →
Idaho’s most popular tax incentive is the three percent investment tax credit. Businesses that purchase qualifying new equipment can earn an income tax credit. The credit can offset up to half of a company’s state income tax liability and can be carried forward up to 14 years.
Dan John manages tax policy at the Idaho State Tax Commission. “So, if you have $100 of computed tax liability, even if you have $1,000 worth of credit, you could only claim $50 of the credit against that liability.”
Whatever is left over can be used for the next 14 years. Plus, this credit isn’t a one-time deal. John says companies that are ‘capital intensive’, like manufacturers, use this credit all the time on qualified purchases. Continue Reading →
The Commerce Department’s website lists 18 different business incentive programs. Many of them are broad and open to any industry. Some are very specific, like the Idaho Film Incentives, which offers discounted lodging and sales tax rebates for media production companies, among other things.
We’ll look at some of Idaho’s most popular tax incentive programs over the next few days and try to answer a few questions. How do they work? Who uses them? What’s the tradeoff that the state is choosing to make when it forgoes tax revenue to spur investment?
And, we want to hear from you. Does your business use tax credits to grow? Are you skeptical of the growth touted through incentives? Share your thoughts throughout the week in the comment thread.
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