Idaho Commerce Director: Tax Rates Aren’t the Key to State Economic Growth

Speaking recently to state legislators looking at tax reform, Idaho’s Commerce Director made a point that’s worth reiterating: states that bet on tax cuts for economic growth are taking a wrong-headed approach.

“In all of those conversations we’ve had with industry leaders, not one of them has brought up tax rates,” said Commerce Director Jeff Sayer, who was appointed to his post by Republican Gov. “Butch” Otter in 2011.  If the legislators’ sole intent is to lower taxes, he said, “I extend to you my extreme caution.”

Just as we’ve done in the past, Sayer described what states should do to build a strong future — invest in high-quality schools and other public services that form a powerful foundation for economic growth.

“We’re going to draw people to our states if we can produce high-paying jobs,” Sayer said.  “Is the tax rate a factor?  Maybe.  But it’s not near the factor as demonstrating to people that we’re investing in our education system, that we’re investing in infrastructure, that we’re providing high-speed broadband in rural communities.  Those are the kinds of things that are attracting people to our state, not a tax rate.”

He’s right.  State and local taxes matter little, if at all, to state economic growth.  States that want to build a vibrant economy with high-paying jobs would do much better to invest in their educational systems, public infrastructure, and other public services that improve the talent of their workforce and quality of life.