House Majority Leader Mike Moyle, R-Star, opened the Rev & Tax committee hearing on his tax-cut bill this morning by saying, “I think there’s a misnomer, if you listen to some of the people, that Idaho is right where it needs to be, that we’re not overtaxed, that we’re competitive with the surrounding states, and I don’t necessarily believe that’s true.” He noted that most surrounding states have lower income tax rates. Setting aside all other factors, he said, “In all actuality, when you’re looking to relocate a business here, that income tax rate is a limiting factor.”

Some of those testifying at today’s hearing agreed, some disagreed. Here’s some of the testimony:

Representatives of the League of Women Voters, the Idaho Interfaith Roundtable Against Hunger and the Idaho Public Employees Association spoke against the bill, which lowers personal and corporate income tax rates by a tenth of a percentage point while raising the grocery tax credit by $10; its fiscal impact is $27.8 million.

John Watts of the Idaho Chamber Alliance spoke in favor of the bill. “We support reducing income tax rates in the state of Idaho, and we have for many years,” he told the committee. “We, as Mr. Moyle’s pointed out, are the highest in the west, except for Oregon, who has no sales tax, and California, who’s sort of in a world of their own.”

Elinor Chehey of the League submitted reports on the increasing number of Idaho school districts asking voters for supplemental property tax levies, a number that’s risen from 52 in 2004 to 95 this year. She urged a no vote on the bill to allow more funding to local school districts, “to meet the Idaho Constitution’s mandate” that the Legislature establish and fund schools.

Darcy James of the Interfaith Roundtable Against Hunger said, “Normally the roundtable would be supporting a bill that proposes to raise the grocery tax credit. And reluctantly, we have to oppose it, as we look at it and think about the wider implications. Our position has always been lower taxes on groceries, raise the tax credit on groceries, as long as it doesn’t hurt low-income Idahoans in other ways. We all know our state budget must always balance. HB 380 proposes a net reduction to the general fund without any identified source of replacement funds.”

Donna Yule, IPEA executive director, said Idaho still hasn’t made up state budget cuts made during the recession and state employee wages lag behind the market, but the state continued cutting taxes through the recession. “If tax cuts alone stimulated economic growth, Idaho would probably be the most prosperous state in the country,” she said.

Ben Davenport of the Associated Taxpayers of Idaho submitted an analysis, saying that the bill would provide tax relief to 76 percent of those who have an Idaho income tax liability and file tax returns. “While it is a modest reduction, you are touching the vast majority of the income taxpayers here,” he said.

Harley Brown, former fringe candidate for governor, offered a rambling speech about income taxes. “The government’s supposed to be our servant, not our master,” he said. “Who ever heard of a servant knowing under penalty of law how many pennies the master made? It’s un-American.” As he walked forward to present his copy of a book to the committee, about taxing financial transactions rather than income, Chairman Gary Collins, R-Nampa, asked him, “Mr. Brown, you’re going to get back to talking about the piece of legislation?”

Brown, returning to the podium, said, “I’ll get off my soapbox now, ladies and gentlemen. Thank you for holding your eggs and tomatoes. God bless you and all that jazz.”

Rep. Heather Scott, R-Blanchard, then asked to ask Brown a question. “Rep. Scott, you’re really daring today, aren’t you?” Collins asked her.

Scott said, “Thank you, Mr. Chairman. Mr. Brown, so are you in favor of this bill to decrease the income tax?” Brown responded, “Anything that’ll reduce taxes I’m in favor of, as long as the state can make it without the income. But Mrs. Elinor there has a really good point, you know the schools, they have to go out and beg for money with these tax levies? C’mon. I realize they account for more than half of the entire budget of the state, but it’s for little kids. At least we’re not Detroit, right? But schools are an excellent expenditure of the dollars, infrastructure and everything else.” As he continued speaking, saying, “I always vote for the man with the biggest bomb,” Scott said, “Thank you, thank you very much.”

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