Wanted: Pro-Business Democrats

As the nation’s retiring space shuttles took aerial victory laps over famous landmarks in April, the Hawaii State House and Senate were busy drafting a rare piece of business-friendly legislation. Not surprisingly, it never made it into orbit.

House Bill 2872 would have set aside a special tax-exempt district near downtown Hilo for companies involved in space exploration technology. Tax breaks were contemplated both at the state and county level to lure space-tech companies to the Big Island, where they would have been expected to form partnerships with the University of Hawaii.

Concept image. Courtesy of NASA.

That kind of business-friendly, creative legislation was badly needed in the Aloha State, especially in Hawaii County, which lags Oahu significantly in employment. Unfortunately, the bill was quickly watered down in committee, and the proposed tax breaks stripped out.

For entrepreneurs, the would-be arrangement seemed to offer hope that the Hawaii State Legislature was finally ready to turn the page on the controversial shutdown of the state’s high-tech tax credit program in 2010. Governor Neil Abercrombie promised more incentives for technology companies during his campaign that same year, and the new measure would have been a welcome follow-through for business leaders that supported him.

Instead of supporting those tax breaks, the legislature mulled various forms of mandatory paid sick leave, stripped funding for Kona Coffee inspections, and passed along tax increases for sub-contractors. Sadly, this is typical behavior for a government already dubbed “The People’s Republic of Hawaii.”

A friendlier environment for commerce is badly needed. But with Republicans holding roughly 14% of Hawaii state house seats and only 4% of the senate, the GOP isn’t likely to stage a legislative takeover this election year. When faced with a one party system, what are entrepreneurs and business-leaders to do?

Image from US Department of Defense.

Elect pro-business democrats.

For the most ardent champions of the free-market, the thought of sending a democrat to represent their interests puts them at risk of a cardiac event. Unfortunately, there are few realistic alternatives, and changing the aloha state’s business climate is a goal we should try to achieve within this century.

We need tax breaks at the state and county level to convince businesses to relocate here, and to encourage the next wave of local entrepreneurs to stay here. Even if the breaks are temporary, gearing our tax code to give relief to new or newly arrived businesses will not gut our state and county finances. To the contrary, even if every venture that moves to Hawaii were staffed by mainlanders, the effect of increased spending by employees and businesses alike would boost income for both local citizens and our government.

At the Hawaii county level, property tax breaks for new business structures would boost a flagging construction industry. Whether new jobs are filled by Big Islanders or New Yorkers, so long as they involve a human being physically manning anything from a computer to a chainsaw here in Hawaii, the long term effect on property tax and general excise revenue will be positive. People need a place to eat and sleep, after all.

Our state already ranks second to last on Forbes “Best States for Business” list, and we can ill afford to wait two or three more decades before re-crafting our incentives for commerce.

For entrepreneurs and CEOs alike, the best shot at a friendlier state government is to dive head-first into our one party system and start picking winners and losers according to their knowledge of business and economics.

They don’t need the GOP. Just make sure they watch CNBC.