After much debate, two alternative tax-cut bills have been introduced in the House Revenue & Taxation Committee this morning, one from Rep. Vito Barbieri, R-Dalton Gardens, to couple grocery tax elimination with various income tax cuts; and another from Senate Tax Chairman Dan Johnson, R-Lewiston, offering a different version of the governor’s bill that already has passed the House by keeping the dependent exemption, rather than adding a new child tax credit; and lowering tax rates in each bracket by slightly less, a 0.3 percent cut, to make up the difference and provide more tax relief to Idaho families.
While Johnson’s bill – presented by Sen. Jeff Siddoway, R-Terreton – was introduced on a unanimous vote, there was a divided, 9-6 vote to introduce Barbieri’s bill. His bill would lower the corporate tax rate all the way down to 5 percent, and make other changes, all without addressing the issue of conformity with federal tax changes.
“This is one of the options for the tax reduction that we’ve been looking at all session,” Barbieri told the committee. “This particular option really reflects the best policy of Idaho. It helps families and it helps bringing in business by cutting the rate. We are reducing individual rates across the brackets by a half of a percent. It eliminates the grocery tax credit and the sales tax on groceries. ... On the corporate side, the investment tax credit is repealed. And to offset that we’ve lowered the corporate rate dramatically, from 7.4 to 5 percent. There’s no conformity in this bill. We believe that should be addressed and follow this bill. ... I think that needs to be addressed as a separate matter.”
House Majority Leader Mike Moyle, R-Star, pointed to numerous concerns in the way the bill was drafted, including one that he said would result in a “windfall” to cities and counties at the expense of schools and the state general fund, as a result of how sales tax distributions would be adjusted. Other committee members questioned why the bill made no provision for large Idaho families who will face big tax hikes in their state income taxes as a result of federal tax changes. Moyle also asked Barbieri why his bill would give a big tax cut to “the big guys,” big corporations like Micron, when 85 percent of Idaho businesses pay their income taxes as pass-through entities, and wouldn’t get the big break.
“We have to begin somewhere,” Barbieri responded, “and the idea here, as you well know, is to make Idaho as friendly for businesses as possible, to draw them in for employment purposes for jobs.”
Rep. Ron Nate, R-Rexburg, said, “We were promised we would be able to give full consideration to all tax plans. … Here’s the grocery tax repeal. We oughta have a full hearing on it.”
Rep. Mat Erpelding, D-Boise, said, “I congratulate the duly elected representative for his 45,000 people that he represents, and he has a right to have this bill introduced. I will never vote to send this to the house floor, but I believe that even bills like this have a right to be introduced, and so I’ll be voting to introduce it.”
In the 9-6 vote, those voting to introduce the bill were Reps. Dayley, Hartgen, Nate, Gestrin, Stevenson, Troy, Erpelding, Gannon and Collins. Those voting against the motion were Reps. Kauffman, Moyle, Raybould, Anderst, Thompson and Gibbs.