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Wednesday, January 16, 2019  Spokane, Washington  Est. May 19, 1883
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Eye On Boise

Labrador increases his tax-cut proposals to nearly 30 percent of the state budget

Idaho gubernatorial hopeful Raul Labrador, currently the 1st District GOP congressman, released his economic plan today, and on top of the $900 million in tax cuts he’s already been advocating, he’s adding another $120 million-plus. Labrador’s “5-5-5 plan” to cut personal and corporate income tax rates and Idaho’s sales tax all to 5 percent, plus his proposal to eliminate the sales tax on groceries, already added up to about a $900 million a year hit to the state budget, more than a quarter of Idaho’s annual general fund budget. In his newly announced plan today, he also calls for phasing out the personal property tax on business equipment.

In 2012, that tax brought in $141 million a year, but then the Legislature exempted the first $100,000 per business per county. That eliminated the tax entirely for 90 percent of the companies that paid the tax, but kept in place 80 percent of the revenue, with just the largest companies paying. Where others – including rivals Tommy Ahlquist and Brad Little – have advocated increasing the $100,000 exemption to $250,000, which would cost the state general fund about $9 million a year, Labrador’s plan calls for phasing out the tax entirely.

“This tax must go,” Labrador said in his proposal. “As governor, I’ll work with the Legislature to once and for all get rid of personal property taxes and its cumbersome paperwork requirements.”

Labrador also is calling for a moratorium on creating new urban renewal districts in Idaho; eliminating occupational licensing programs “that protect special interests, not the public;” and creating a new Governor’s Office of Innovation and Economic Competitiveness. You can read his full proposal here, which Labrador’s campaign dubbed “the first plank of his conservative vision for a stronger Idaho.”

Labrador also took the opportunity in his proposal to bash his two leading opponents for the GOP gubernatorial nomination, Lt. Gov. Brad Little and businessman Tommy Ahlquist, while not naming them, but suggesting they “support economic policies that give preferential treatment to their friends and business partners.”

Little’s campaign had no immediate response this afternoon to Labrador’s proposal, but Ahlquist’s campaign manager, David Johnston, said, “Congressman Labrador is a typical D.C. politician who likes to make things up when the facts aren’t on his side and clearly doesn’t understand how the economy works.  While Congressman Labrador has been living off of the taxpayers of Idaho, Tommy has been in the real world investing hundreds of millions of dollars into the Idaho economy and creating thousands of jobs for hard working Idahoans.  The time has come in Idaho for a political outsider like Tommy who get things done and will bring new ideas and a fresh approach to government and no more career politicians who just like to talk and play politics like Congressman Labrador.”

I analyzed all three candidates’ tax proposals and their price tags in a Dec. 3 article here.

My tally put Little’s tax-cut proposals at $115.9 million in first year and nearly $200 million a year after four years; and Ahlquist’s at $631 million a year. Labrador’s, which at that point was at $900 million, is now up to $1.02 billion. That’s nearly 30 percent of Idaho’s $3.5 billion a year general fund budget. Here’s the breakdown of Labrador’s proposals:

  • Lowering Idaho’s individual income tax rate to 5 percent would slash $465 million a year from the state general fund.
  • Lowering the corporate income tax to 5 percent, from its current 7.4 percent, would add another $73 million in cuts.
  • Cutting the sales tax from the current 6 percent to 5 percent would cost the state general fund $298.4 million a year.
  • Eliminating the sales tax on groceries would cost $66 million a year. Current proposals to eliminate that tax, along with the grocery tax credit, have a fiscal impact of $79 million a year; Labrador's is lower because he'd also lower the sales tax from 6 percent to 5 percent.
  • Eliminating the personal property tax on business equipment, which Labrador wants to phase out, would cost more than $120 million a year once fully implemented. Currently, the state general fund pays out $18.9 million a year to counties to make up their lost revenue from the $100,000 per county exemption. Labrador didn’t say if he’d have the state make up the counties’ losses when he phased out the tax.

Labrador also says he would “end tax giveaways that create an uneven playing field for Idaho businesses,” but names no existing tax breaks he’d eliminate. "My plan to strengthen Idaho's economy will unleash the raw potential of our citizens and industries, creating an environment to foster sustained, strong economic growth," he said. "I know that when government gets out of the way, people thrive."

Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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