Committed to maximizing its economic potential, Idaho is opening an aggressive new front in its campaign to convince companies to re-locate from other states. Gov. Dirk Kempthorne and the state Legislature put into place a package of incentives this winter to reward business for investing in Idaho now.
“This is an investment that will pay for itself with new, high-paying jobs and increased tax revenue to the state,” Kempthorne said of the Idaho Corporate Advantage and Idaho Business Advantage incentive packages.
At the center of the campaign is a five-year window through 2009 during which significant business investment in facilities and payrolls will be rewarded with major reductions in business income, sales and property taxes.
“These incentives enhance Idaho’s already favorable business climate and complement the skilled labor force, relatively low living costs and quality of life our state is known for,” Commerce & Labor Director Roger B. Madsen said. “Investing in Idaho now not only makes sense, it pays off.”
The state hopes that the incentives for investing in Idaho will foster further expansion of the state’s roster of corporate headquarters that currently includes Albertsons, Micron Technology, Boise Cascade, Washington Group International, AMI Semiconductor, IdaCorp, J.R. Simplot Co., Coldwater Creek. and Buck Knives.
Under the Idaho Corporate Advantage, corporations relocating their headquarters or major administrative centers to Idaho – or committing to a major expansion of operations already in Idaho – qualify for tax breaks if they make a $50 million investment in administrative facilities and bring in at least 500 jobs averaging $60,000 each. The pay range of those jobs must be between $32,240 and $200,000 a year.
The payoff is a combination of tax credits that a company could use to completely eliminate its annual state tax liability year after year until they are used up. The credits include:
— A three percent Investment Tax Credit for equipment is doubled for property qualifying for the investment tax credit;
— For the first time, a tax credit is provided for the actual facility at 10 percent of its value, limited to $500,000 of tax liability in any one year; and
— A tax credit ranging from $1,000 to $3,000 per job is available for every job paying at least $32,240 to more than $90,000 a year.
— In addition, the company is exempt from state sales tax on materials for construction of its facility, and all property taxes up to $2 million a year are rebated on the new facility or on the new facility located at the site where 80% or more of the improvements were made. The property tax rebate is available for tax years 2005 through 2012.
The Idaho Business Advantage, open to companies that don’t qualify for the Idaho Corporate Advantage, gives special incentives to any business creating at least 10 new jobs paying $40,000 a year or more with an accompanying investment in headquarters or administrative facilities equal to $50,000 for each of those new employees. Those tax breaks are:
— An enhanced 3.75 percent investment tax credit, rather than the existing 3 percent credit, on the new equipment up to 62.5 percent of annual state corporate income tax liability;
— The same enhanced 3.75 percent tax credit on any other investments made in the state of Idaho through 2009;
— An additional tax credit on the facility itself at 2.5 percent of its value up to $125,000 in any tax year;
— A 25 percent reduction in the sales tax owed on materials used in building the new facility; and
— A tax credit ranging from $1,000 to $3,000 per job for every job paying at least $32,240 to more than $90,000 a year.
The package also exempts from sales taxes equipment used for research and development and alternative energy production of at least 25 kilowatts and caps property valuation for tax purposes at $800 million for business operations with even higher assessed values and at least 1,500 workers in the state if they make a capital investment of at least $25 million during the tax year.
Unused credits can be carried forward for up to 14 years. Job credits can be carried forward up to 10 years.
These benefits come on top of existing business tax breaks that include a full sales tax exemption on purchases used in business production, pollution control, industrial fuels and raw materials and goods purchased for sale outside Idaho. There are also investment tax credits over the standard 3 percent for Idaho research and broadband equipment.
“The continued strong growth in our economy, added to the steps we’ve taken to bolster our economic base, gives us the tools to meet the needs of Idahoans,” Kempthorne said. “Investing now to intensify economic development means more jobs, higher incomes and a rising standard of living for us and our children.”
For details on Idaho’s business incentive package, visit cl.idaho.gov, or call Randy Shroll, sales and marketing manager at 208-334-2470.
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