Idaho House, Senate near compromise on tax cuts

BOISE – A compromise is emerging between the House and the Senate on tax cuts, as lawmakers push to wrap up this year’s legislative session.

On Wednesday, the Senate Local Government and Taxation Committee finally held a hearing on the House-passed income tax cut bill from House Majority Leader Mike Moyle, R-Star, that’s been languishing since early February. The panel voted with just one no vote to send it to the Senate for amendments.

Senate President Pro-Tem Brent Hill, R-Rexburg, outlined the amendments he has in mind: He’d like to adjust the $51.2 million in income tax cuts into a new plan to drop all brackets by a single tenth instead. The current plan would lower top rates from 7.4 percent to 7.2 percent for both personal income tax and corporate income tax and exempting the first $750 in taxable income.

That would reduce the total cost to the state general fund to $27.9 million a year. Plus, Hill wants to add on a cut in unemployment tax rates for employers that Gov. Butch Otter called for at the start of this year’s legislative session.

Moyle said he believes lowering Idaho’s income tax rates will help attract businesses to the state.

“When we look at tax policies, the big shifts are the hard ones,” he said. “This is an incremental one.”

Hill expressed his appreciation to Moyle.

“This has been a crusade of his,” he said. “I know that he’s committed to it and that it’s from his heart. We haven’t always agreed on how to get there. … I think it’d be sad if we left this session without some tax relief.”

Only Sen. Mark Nye, D-Pocatello, voted against the move. He said he favors addressing education and state debts more before tax cuts.

After the meeting, Moyle said, “I think it’s a fair compromise – it’s kind of in the middle. It’s a step in the right direction.” He added, “I understand with where the budgets are, $50 million is probably too high for some.”

House Speaker Scott Bedke, R-Oakley, who sat in the front row of the audience for the hearing, said it’s “a great compromise, as far as I’m concerned, and I hope that the Senate considers that amendment favorably.”

Testimony in favor of plan came from the Idaho Chamber Alliance and the Idaho Freedom Foundation.

Idaho lawmakers are pushing to finish the legislative session by the end of next week.

Sen. Jim Rice, R-Caldwell, said, “We have a number of tax policy choices that I think we should be looking at. I’m OK with doing this one this year and the grocery tax next year, but I think eliminating the tax on groceries is a significant and important tax policy change we need to make.”

Nearly half the Legislature has signed on to co-sponsor legislation to repeal Idaho’s 6 percent sales tax on groceries, but the bill hasn’t gotten a hearing.