The things this small state does affect things around the world. —Michael Sullivan, Utah Governor's Office of Economic Development
It’s no secret that Utah’s economy is a model of health when compared to many other cities and states around the nation, including the city of Detroit, which recently filed for bankruptcy.
What you may not realize is the way Utah’s low unemployment rate is helping to bolster the rest of the nation.
Utah’s pro-business tax rates and incentives have not only helped Utah weather the economic storm, but also helped to create 66,600 new full-time Utah jobs in the last year and a half. Experts say these jobs not only help Utah but spur spending in the national economy.
“The things this small state does affect things around the world,” said Michael Sullivan from the Utah Governor's Office of Economic Development. “The governor has often been quoted as saying the nation should look to Utah as an example of how to do it right.”
In the financial sector, much of the state's economic success comes from a unique bank charter offering which allows industrial loan companies to set up shop in Utah.
An Industrial Loan Company, or ILC, allows non-financial institutions like Target, BMW, Home Depot, GE or dozens of similar non-bank companies to lend money to consumers, usually through a branded credit card.
The Beehive State was the first to offer this unique charter and is one of only seven states in the nation that allow it. Dozens of large companies, including Goldman Sachs, have moved a large part of their financial operations and thousands of jobs with them to take advantage of Utah’s offering.
Utah has become a financial center in the west. Merrick Bank, an ILC headquartered in South Jordan, employs more than 150 people in Utah. Those employees service more than 1.3 million customers in every state across the nation. Additionally, the bank holds more than a billion dollars in assets.
“Especially in this economy, not everyone banks at a bank. We give all kinds of people the availability to get credit in the marketplace,” said Rick Urrutia, President and CEO of Merrick Bank.
Merrick Bank specializes in providing credit to high-risk, low credit score customers.
“This recession cut too many normal customers out the banking system,” Sullivan said. “Most are good people who had a financial problem, many not of their own doing. Through analysis and financial modeling, we identify the people who got dealt a bad hand. We can offer them credit and help get their life back to normal, bringing them back to the market and banking system.”
Government leaders say the ILC industry is an important piece in helping the country make economic progress.
“Utah’s Industrial Loan Industry enables consumers across the country to have financing to buy and sell products,” Sullivan said. “BMW’s bank benefits customers around the world. Target bank benefits customers across the country. Medallion Bank, who is headquartered here, helps taxi drivers in major cities like New York get financing for their Taxi Medallion (taxi operator license). Anyone who rides in a cab benefits from that.”
Officials say Utah’s economy is reaping the benefits of creating one of the nation’s most business-friendly tax environments. Offering post-performance tax incentives to new companies when they relocate to Utah has been the key to attracting tens of thousands of new above-average salary jobs.
“We offer post-performance tax incentive credits to companies that create more than 50 full-time jobs in five years,” Sullivan said. “We give back a portion of taxes they paid in the prior year for the new employees they’ve added as long as the jobs paid at least 125 percent of the average wage in the county they were created in, including benefits.”
State leaders say there is no reason other states couldn't provide these kinds incentives since they don’t cost the state anything. Tax rebates are only given post-performance. Companies don’t receive the incentive until after they’ve met the criteria creating new full-time employment positions.
This article was paid for and produced by Zions Direct. Read more of their content on DeseretNews.com