Why This Strategy Works

When our state government grants a special interest tax exemption, it frees a particular sector or business from paying the taxes that the rest of us pay in the hope that this will benefit Idaho’s economy.  Right now, there are more than 125 tax exemptions in Idaho code.  This means that we’re giving a special deal to 125 sectors or businesses in the hope that they’re the sectors and businesses that will generate real economic growth.  But are we getting it right?

Too often, we’re not.

This isn’t surprising.  Tax exemptions interfere with the free market economy.  Every time state government grants a tax exemption, it substitutes its judgment for the market’s judgment about who the winners will be in tomorrow’s economy.  But do you trust state government over the market to pick economic winners?  I don’t. The legislative process for granting tax exemptions is simply too politicized.  Think about which sectors and businesses get tax exemptions.  Typically, it’s the sectors or businesses that have the wherewithal to hire lobbyists to navigate the complicated legislative process—big businesses, powerful sectors.  Small businesses, that don’t have the time or means to engage the legislative process, are the last to get tax exemptions.  But overwhelmingly, research demonstrates that small businesses are the engines of economic growth in our economy.  Small businesses generate 80 percent of new jobs.

As a result, special interest tax exemptions systematically disadvantage the most vibrant sector of our economy.  If we eliminate ineffective tax exemptions in order to reduce overall tax rates, we will unleash our economy.  We’ll effectively shift tax incentives from the least productive portions of our economy to our small businesses—the real economic engines of job generation.  And, we’ll attract more businesses—large and small—through our fair and competitive tax rates.

Why We Haven’t Done It Yet

With such a powerful strategy available to us, why hasn’t our state government pursued it on our behalf?

It’s a political problem, not a policy problem.

We’ve known for years that eliminating tax exemptions in order to lower the overall tax rate is smart policy that will unbridle the economy.  Legislative task forces and interim committees have done substantive work demonstrating the power of the idea.  Economists from across the political spectrum agree about its effectiveness.  It’s just difficult for life-long politicians to say no to special interests.

How We’ll Get It Done

To get this done, we’ll have to engage our government in the way our founders intended.  The founders warned us against the “problem of faction”—what we, today, would call political parties or special interests.  They knew that in order to find the best solutions to our problems, we would need to work together across the lines that tend to divide us.

That’s what I’ve done for the last five years.  I’ve brought together everyday Idahoans—Republicans, Democrats, and independents—to think about tough problems and offer practical solutions.  What’s remarkable is that we’ve succeeded.  We’ve demonstrated that our system of government works remarkably well when you engage it the way our founding fathers intended.  As a result, we’ve cut property taxes on Idaho homeowners and protected your private property rights.  We beat back Otter’s proposal to build a private prison and his proposal to raise car and pickup truck registration fees by 138 percent in the middle of a recession.

As a governor in partnership with everyday Idahoans—Republicans, Democrats, and independents—we can close ineffective special interest tax exemptions in order to lower overall tax rates.  The principle is simple: If the governor partners with everyday Idahoans, then together we can make wise decisions about what’s in our best interests and overcome the self-serving power of political parties and special interests.

Here’s what it would look like.  First, I’ll gather together the experts—economists, the legislative leaders of task forces and interim committees that have reviewed special interest tax exemptions, and even the special interests themselves—to have them give us their best insights into Idaho’s existing tax exemptions.  I’ll work with them to capture the pro and con arguments about every tax exemption in a policy brief.  Can we really capture the complexities of the issue?  Sure.  Can we put it into language that everyday Idahoans understand?  Sure.  I’ve done it for five years.

Second, I’ll invite thousands of Idahoans, randomly selected from the registered voter list, to read the brief and give their opinion on which tax exemptions should be closed.  Will everyday Idahoans take the time?  They will.  When your governor says, “Help me lower overall tax rates and jump start this economy by partnering with me to decide which special interest tax exemptions we ought to close,” Idahoans will weigh in.

Third, I’ll introduce a single bill into the legislature that proposes to close every tax exemption everyday Idahoans felt should be closed in order to reduce overall tax rates.

Fourth, I’ll partner with the thousands of everyday Idahoans whose good judgment formed the basis of the bill and with every other concerned Idahoan to make sure that the bill makes it through the legislative process.  This is where our partnership is so important.  A governor in partnership with thousands of informed and activated Idahoans can prevail over the big businesses and sectors that have a narrow, but deep interest in preserving tax exemptions that work really well for them but don’t serve our common good.

When everyday Idahoans are informed and mobilized, we can beat back special interest influence.  As president of The Common Interest, I’ve succeeded in cutting property tax rates for Idaho homeowners, in protecting private property rights, and in ensuring open government.  A governor, in partnership with everyday Idahoans, can close tax exemptions in order to reduce overall tax rates.  We can unleash the power of Idaho’s small businesses and grow new and better jobs.  Together we can get it done.