Exemptions disliked but unlikely to change
Idahoans favor reform of the state’s tax structure, but the path to change is full of obstructions.
In a Spokesman-Review poll done in collaboration with six other daily newspapers in Idaho, 54 percent of respondents said they want tax reform, with 33 percent saying the system is fair and adequate.
But three questions on removing sales tax breaks for specific industries, goods and services totaling $1.75 billion prompted high rates of undecided responses and no majority for lifting some or all of the breaks.
“I think they’re just telling us there are too many elements they don’t understand,” said state Sen. Tim Corder, R-Mountain Home, a member of the Senate tax committee and leading advocate of reform.
House Democratic Leader John Rusche, D-Lewiston, agreed. “There’s a lot of confusion, and it’s going to take a lot of clarification and discussion.”
Rusche, however, said Idahoans are drawing the line on further cuts in K-12 education.
In the poll, 59 percent said GOP Gov. Butch Otter and GOP legislative leaders were right to rule out tax increases in 2010. But by a 48 percent to 38 percent margin, they would support raising taxes to avoid another round of cuts similar to the 7.5 percent reduction in school support in 2010.
“People are extremely concerned about what’s happened to education, but they don’t have a clear idea of how to get us out of it,” Rusche said.
Corder has pressed for a review of tax breaks but been rebuffed by his GOP colleagues. His outspokenness made him a target of the Idaho Association of Commerce and Industry, which tried to defeat him in the 2008 primary. Corder won but now says a serious look at reform is likely only with business backing. He’s been meeting with IACI officials, including President Alex LaBeau and incoming Chairman Mike Reynoldson of Micron.
LaBeau is cool to the idea because he says the ground has been trodden and his members oppose net tax increases.
GOP legislative leaders agree. Said Senate President Pro Tem Bob Geddes, R-Soda Springs: “The elimination of exemptions would not be designed to reduce revenue, but rather to increase revenue. That makes an elimination a tax increase and that is problematic for me.”
Geddes said the Idaho Newspaper Poll questions are too general to prompt policy change. “Most people are unsure of what the tax exemptions are specifically and how they would be impacted.”
Poll respondents, even those who want reform, support Geddes’ view.
Brett Hymas, of Payette, has four children in public schools and wants more revenue for education, particularly after the 7.5 percent cuts. “They don’t have new books; they changed the bus routes; they’ve cut back on games and extracurricular activities,” he said.
Yet Hymas opposes taxing health care – the biggest exemption at $397 million – and is concerned about how the Legislature would pick winners and losers. “At least right now you know where it’s coming from,” he said. “Just leave it the way it is.”
Senate Local Government and Taxation Committee Chairman Brent Hill, R-Rexburg, has favored a review of exemptions but said the poll results are inconclusive. When voters learn the specifics they often resist the idea of change, he said.
“It’s a lot easier to give a ‘yes’ to a pollster than it is to give a dollar to the tax collector,” Hill said.
Diana Zuckerman, a Boise stay-at-home mother with children ages 7, 5 and 4, told the pollster she’ll give another dollar.
“It’s hard times and we all need to sacrifice a little, get our priorities straight and make sure our kids get a good education so they can have a better future,” Zuckerman said. “I’m willing to pay more taxes to pay the teachers more, have smaller classes and fresher food in the cafeteria.”
House Assistant GOP Leader Scott Bedke, of Oakley, said he’s hearing similar sentiment. “There’s a perception that the quality of education is going to diminish because of the cuts.”
But by the time lawmakers meet in January, Bedke speculates that may wane and ease pressure for tax increases. “I think there might be a new normal,” Bedke said. “When you talk about it in the aggregate, eliminating tax exemptions sounds good. But when you look at each exemption, I just don’t think there’s political critical mass to start removing them.”
The gatekeeper on any such changes is House Revenue and Taxation Committee Chairman Dennis Lake, R-Blackfoot. He said he doubts lawmakers can stomach more deep cuts in K-12.But he’s undecided about initiating a review of exemptions, in part because he tried and largely failed in 2008: “I got put in my place pretty quickly.”
About the poll: Mason-Dixon Polling and Research Inc. of Washington, D.C., interviewed 625 randomly chosen registered Idaho voters Sept. 13-15, limiting the interviews to people who said they are likely to vote in November. The statewide poll’s margin of error is 4 percentage points, with a 95 percent probability that results would fall within that margin if the entire population were sampled.
Sixty additional interviews were conducted in the 1st Congressional District to bring the total sample size there to 400 likely voters, and 15 additional interviews were conducted in the 2nd Congressional District to bring the sample size there to 300. The margins of error are 5 percent in the 1st District and 6 percent in the 2nd. The extra interviews covered only the congressional races.
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