Incentive for cuts

         Action on business taxes may firm up
                       Intel’s Chandler plans

 
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The East Valley Tribune
January 23, 2005

    Intel Corp.CEO Craig Barrett’s Jan. 14 announcement that the computer chip giant is considering upgrading and increasing production capacity at its Chandler plant is quite gratifying, and should give impetus to proposals to trim Arizona’s too-high business taxes, which surely will be a factor in the final decision.

    The Tribune’s Ed Taylor reported Barrett’s comment that barring a major economic downturn or any new government policies that would discourage investment in Arizona, the Ocotillo plant is in a very good position to receive the $4 billion to $5 billion in improvements. They would include a new manufacturing fab (fabrication plant), the complex’s third.

    In fact, there are signs that the state is trying to encourage just such investment. Gov. Janet Napolitano has proposed trimming the business personal property tax. Meanwhile, the Arizona Chamber of Commerce has recommended cutting the property tax assessment for business, which currently stands at 2 1 /2 times that levied on residences.

    The decision on improving Fab 22 and building the new fab may come by midyear. Only half of Intel’s 700 acres in Chandler have been built upon, leaving plenty of room for growth.

    Legislators thus have an issue of potentially gargantuan impact on the state and the East Valley tantalizingly being held before them. The governor’s and the chamber’s proposals deserve serious consideration at the State Capitol this winter and spring, because Intel’s decision well could be influenced by a reduction in business taxes. For its part, Intel continues to show a strong commitment to its Arizona holdings. It is spending $2 billion to double the capacity of its existing Fab 12 at Ocotillo, enabling it to produce the most advanced chips.

    Chandler Planning and Development Director Doug Ballard told Taylor that Chandler would be quite attractive to more Intel projects because of its skilled work force and the city’s track record of working with Intel on complex projects. A new fab would mean between 800 and 1,200 high-tech jobs.

    Many factors would go into a decision as large as Intel’s, to be sure. Certainly, however, how much more in taxes a business would have to pay on an investment of billions of dollars in Arizona has to weigh heavily on that business’ executives as they ponder such a decision.

    Indeed, the Legislature would go a long way toward creating a climate more favorable to such new or expanded business ventures by acting at long last to lower this state’s inordinately high business tax rates.