What is the goal of business: to minimize taxes or maximize profits? Obviously, the goal is profits — the difference between revenues and costs. Taxes are obviously an important component of costs to businesses, but they are far from the only cost.

When a business starts up, relocates to or grows in a state, it is doing so based on the overall costs, not just one element of costs. I say this not as an academic, but as one who has served many years in the private sector making acquisition, disposition, expansion and contraction decisions.

Recent policy proposals have highlighted Idaho’s business personal property tax, so it is important to understand Idaho’s taxes and overall business costs. Assessing these costs can be difficult, and the answer will vary quite a bit by type of industry and specific location within the state, but it is useful to review popular, published state data.

Starting with the big picture, a 2012 CNBC survey listed Idaho as the 13th best state overall for competitiveness and ranked Idaho as seventh best in terms of cost of doing business.

The Milken Institute, a leading nonpartisan economic and policy think tank, has done comprehensive assessments of the costs of doing business by state, most recently in 2005 and 2007. Milken listed Idaho as the fifth lowest-cost state in which to conduct business in those years. Idaho’s cost of doing business was 17 percent below the national average.

What is included in these cost statistics? The principal costs are wage rates, energy costs, rental rates and tax rates. Bottom line; All things considered, Idaho is very competitive. Milken did list Idaho’s tax burden as 37th and 31st in these two years, meaning our rates were higher than average. However, our wages, utilities and rents made Idaho a relatively attractive place to do business.

Milken provides one of the more pessimistic views of Idaho’s tax competitiveness. Rankings of tax burdens are highly variable because of the approaches to weighting different types of taxes. The Tax Foundation think tank released a report in October listing Idaho’s business tax burden as 20th overall in the United States. Somewhat surprisingly, the report listed Idaho’s overall property tax burden as second-best in the country.

Some of these tax studies weighted individual income and property taxes. Ernst and Young, a tax consultancy firm, did a study in conjunction with the Council on State Taxation in 2012 that isolated the business tax burdens directly. It ranked Idaho’s 2011 business tax burden as 18th best in the country overall. Furthermore, Ernst and Young concluded that 36 percent of Idaho business taxes were derived from property taxes of all types, which placed us 23rd in the reliance on property taxes for business taxation.

Idaho’s business cost structure is not out of sync with the rest of the country. Its overall tax structure is middle of the road, and property taxes represent a fairly normal share of overall business taxes.

So a change in our business personal property tax is not necessarily warranted on the basis of the overall cost of doing business, particularly when we recognize that other types of taxes are likely going to be increased to offset the revenue losses.

If the policy goal is to foster business growth in industries that are particularly sensitive to personal property taxes, we should be explicit about that goal.

Brian Greber, director of Boise State’s Center for Business Research and Economic Development. briangreber@boisestate.edu