Sunday, July 19, 2009

Competing with Tax Incentives

Although Arizona is a great place to produce energy from solar, it hasn't seen much manufacturing of the solar panels themselves. Part of the reason is that other states offer significant tax incentives which have been lacking in Arizona. State Senator Barbara Leff sponsored a solar manufacturing bill which was recently passed and signed into law by the governor. Apparently it is bearing fruit.

Chandler has made the "short lists" of two large German solar manufacturers looking to build new plants in the United States, said economic-development director Christine Mackay...

"For the first time, we were taken seriously," thanks to the incentives, she said of her whirlwind recruiting effort at the Inter Solar North America conference Tuesday and Wednesday...

Before she left for the conference, Mackay said that Chandler has lost prospective solar businesses to Oregon and New Mexico, which had been offering financial incentives Arizona did not.

"I was beyond thrilled" when the governor signed the incentive bill, she said, adding that within hours of the action, she set up the California trip and meetings with 30 key solar-industry officials.

I generally dislike tax incentives targeted at a specific industry. First, it seems unfair for the government to pick winners and losers (aside from the fact that throughout history they have been pretty bad at it.) I would prefer that we provide incentives for all businesses by lowering all of their tax burdens.

However, with the state budget crunch, we're not going to see that happen so we seem to be relegated to doing it piecemeal.

(Just so you know, Senator Leff is my state senator.)

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