To your credit: tax incentives build Utah businesses.

• Author: Mischel, Marie
• Position: Focus

Since August, Utah Gov. Gary R. Herbert has continued his predecessor's business-friendly policy of offering tax credits to high-paying companies that either expand or relocate to Utah.

[ILLUSTRATION OMITTED]

Economic development tax increment financing (EDTIF) is a common method to encourage business growth. At the state level, in Utah, the program essentially offers a tax credit to qualifying companies; a post-performance policy that doesn't divert taxes from other taxpayers.

"Those are the kinds of incentives we like to see because it means that we're not taking existing tax dollars, or supporting businesses that are oftentimes just in competition with other businesses who are paying the taxes," says Lane Beattie, Salt Lake Chamber president. "We want tax policies to drive economic development, not restrict it, not take away from it, not dry it up."

How It Works

With the ongoing economic downturn, many companies are making do with fewer employees and being extremely cautious about expansion. "Consequently, we can stimulate our Utah economy by attracting really well-run, strong companies that pay good wages and benefits. That's why corporate incentives, on top of everything else we do, are important," says Spencer Eccles, executive director of economic development for the Governor's Office of Economic Development (GED), whose goal is "to nurture an environment where Utah companies can be successful," according to goed.utah.gov.

GOED also encourages growth of existing businesses; 10 of 11 of its last tax incentives were given to either homegrown companies like Merit Medical or those like E-Bay that already have operations in the Beehive State.

To qualify for EDTIF, companies along the Wasatch Front must pay more than 125 percent of the average salary; if they're located in the 17 rural counties, they must pay 100 percent of the average. In either case, they must also offer benefits, meet certain investment goals such as the number of jobs offered and show that they were considering locating or expanding outside Utah.

One example of EDTlF's success is the Procter & Gamble facility in Tremonton, which is scheduled to open this spring. At capacity, it will employ more than 1,000 people and is expected to generate almost $100 million in new state revenue and $400 million in wages over 10 years.

"Procter & Gamble defines blue chip companies," says Derek Miller, GOED's managing director for business incentives and growth. "They're exactly the...