Oregon
An AP story on OregonLive.com reports that a "tax break designed to lure Intel and other chip manufacturers to Oregon is now going to smaller companies, raising questions from critics who say the investments would have been made without the incentives."
The AP story quotes Bill Conerly, an economist who works with the Cascade Policy Institute. Conerly says, "I'm very skeptical. The initial use of the SIP (Strategic Investment Program) for the semiconducor companies, there was some logic there. But as you lower the dollar threshold . . . most of these outfits don't need that."
I'd like to know more about the SIP and Oregon's tax structure, but initially I disagree. Investments are made without incentives, no matter if the investor is a small or large company. I don't know how it is necessarily true that Intel needed the initial breaks to invest in Oregon; I would like to know what the "logic" was.
My main concern though is Conerly's implication that the smaller your business is, the less deserving you are of a tax break. That's a policy for big business protectionism.
posted by Brandon @ 7:29 AM
1 comments
1 Comments:
Here's the logic of our Strategic Investment Program (to which I am
generally opposed).
In Oregon, companies (but not individuals) pay property tax not only on
their land and buildings, but also on the equipment inside the building.
That has been especially onerous for the semiconductor industry, which is
large here. (We have Intel's largest operations here.) Imagine two plants
side by side, with equal acreage, equal size buildings, equal workforce,
equal water usage, but ... one make computer chips and one makes potato
chips. Because the computer chip manufacturer uses very expensive
equipment, his tax bill may run about 30 times higher than the potato
processor's tax bill, for roughly comparable usage of public services. The
best way around this would be to eliminate the tax on equipment, but a
clumsy, second-best way is to offer a tax break to the semiconductor
industry. In the past, I've argued that although capital-intensive
businesses are overtaxed and need relief, the SIP is wrong to target
specific industries rather than capital intensity; it is wrong to target big
business over small business; and it is wrong to be discretionary (the
county commissioners approve each specific deal, setting the stage for
political corruption of one form or another).
I concur that government should not pick winners and losers, but sometimes a
bad idea offsets an even worse idea.
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