Guest column: We fail to ask the second question

Ask a business leader if they’d prefer tax cuts or qualified workers and you’ll get the same answer nearly every time, writes Jeff Sayer.

One of the most enlightening experiences I had while serving as the Director of the Idaho Department of Commerce was a conversation with a prominent Idaho business owner. He was lamenting a multi-million-dollar tax bill on his horizon and out of genuine curiosity I asked a simple question, “If given a choice of lower taxes or adequate skilled talent to grow your business, which would you choose?” Without hesitation or equivocation, his reply was instant– talent!

Any business owner will say yes when asked if they want lower taxes. But we fail to ask the second question. If given a choice between lower taxes or making the investments in resources they need to grow, most will choose investing in talent and infrastructure.

We ignore a 21st century reality. Lower taxes do not create the most economic growth. Instead, a rapidly changing economy demands businesses have resources to continually adapt and expand to remain competitive. In fact, economic development polls consistently place lower taxes as a distant priority for businesses; behind talent, quality of education, infrastructure, energy costs and other priorities. For our small economy, pipelines of skilled talent, quality education and adequate infrastructure are far more important priorities than a nominal decrease in taxes.

The question becomes, before we race to lower taxes, have we done enough to help our job creators to expand, adapt and grow to remain competitive? No, we have not.

In contrast, I share a recent conversation I had with a Utah legislator who is a prominent figure in their tech economy. In an engaging discussion he shared their tech sector is growing at 7 percent a year! To compare, remember China consumed the entire world’s resources at 8 percent growth.

He continued, a few years ago Utah set aside $20 million in a performance based fund that rewarded universities for producing computer science graduates. They now have universities across their entire state producing those graduates. In fact, they have over 4,000 university students in their computer science programs! Some call that outcomes based funding. I call it an amazing talent pipeline cranking out skills they know their economy needs. Some would argue Utah’s growth is from their lower taxes. I respectfully but emphatically disagree, it’s their talent pipelines.

Every morning when I read the paper I yearn to see thoughtful, new and innovative ideas coming from our state leaders. Some exist. We must celebrate JFAC’s recent decision to increase education spending by 5.9 percent and thank goodness, we are raising pay for teachers.

There is so much more we can do. We must ask, what produces a higher return on our tax dollars than a 0.00475 reduction in taxes? The world has changed and we need to pay attention. If we want a competitive economy we need to engage our innovative spirit, move faster, invest in our future and lead. Lead with ideas that drive real returns for our tax dollars. Lowering taxes is not one of them.

Jeff Sayer, former Director of Idaho Department of Commerce and Managing Partner of Rectify Partners a business advisory firm.