Idaho House panel backs tax-cut bill

BOISE, Idaho (AP) — An Idaho House panel has cleared a $22.6 million tax cut proposal that would lower tax rates for the state’s top individual earners and businesses.

The legislation would reduce the state’s top two individual income tax rates currently at 7.4 percent and 7.1 percent by one-tenth of a percentage. The measure would then reduce the corporate income tax rate from 7.1 percent to 7 percent.

The House Revenue and Taxation Committee voted 13-2 Monday to send the bill to the House floor. Rep. Dan Rudolph of Lewiston was the only Democrat to vote in favor.

“Tax policy is not always easy, what we do here is not always easy,” said House Majority Leader Mike Moyle from Star, who introduced the measure. “It’s a balancing act.”

For lower-income Idahoans, the bill would increase the state grocery tax credit by $10 per person — which would cost the state $5.2 million. This would mean that most eligible residents would be reimbursed $110 for taxes paid on food.

As of Monday, the bill had 27 sponsors — including House Speaker Scott Bedke and the remaining House majority leadership. The legislation needs just 36 votes to pass the House floor.

Reducing the top two individual rates by one-tenth of a percent would cut tax rates for 74 percent of all taxpayers, or roughly 353,400 filers, according to the Division of Financial Management. Nearly 190,000 Idahoans have no taxable income.

However, according to the Idaho Center for Fiscal Policy, most Idaho households would not see a significant change in their annual tax bill because of this legislation. Instead, Idahoans with annual incomes $99,000 or higher would receive most of the benefit. For example, households earning $444,000 or more each year would see an estimated $815 tax cut. Meanwhile, families earning $41,000 a year would see a $23 tax cut.

“I’m a little disappointed in where we put our priorities,” said House Minority Assistant Leader Mat Erpelding of Boise, who voted against the bill.

Compared with neighboring states, Idaho’s top individual income tax and corporate income tax rates are higher than Montana’s and Utah’s. Washington, Wyoming and Nevada do not tax in those categories.

Staff writer Betsy Z. Russell contributed to this report.