A 14-member legislative committee, including members of both the House and Senate tax committees, convened this morning to start a long and hard look at Idaho’s tax system – and specifically at all exemptions, deductions and credits, what they accomplish and whether they’re justified. All members present, from both parties, said they came to the table with an “open mind.”
“We as legislators have granted almost every credit that anybody’s asked for over the years,” committee Co-Chairman Brent Hill, R-Rexburg, the Senate tax chairman, told the panel. Idaho’s sales tax started with 17 exemptions; now it has more than 80. Idaho’s added 13 business tax credits to its income tax code, each requiring a separate form. It’s come up with more than 20 adjustments to federal income, said Hill, a CPA. “I’m not against exemptions, deductions and credits – I’ve spent my life searching for them for my clients,” he said to laughter. “Some of us see tax cuts as good, regardless of whether they’re fair or equitable, regardless of whether they’re good tax policy – if it reduces tax, it’s a good thing, it helps control government spending. I’m in agreement that we need to control government spending, but I don’t think that’s what we’re accomplishing with many of these exemptions and so forth. … We’re merely shifting the burden to the other taxpayers.”
Hill said he has no desire to increase state revenues. He wants the panel to re-examine the tax system solely to make it more fair, equitable and effective. As he spoke, an audience heavy with lobbyists listened closely. Many of the same lobbyists have argued, often successfully, over the years for tax breaks for their clients. “Obviously we’re going to look at whatever might come out of this group and the impact it will have on our ability to do what we do, and tax policy is a big part of that,” said Jack Lyman, executive vice president and lobbyist for the Idaho Mining Association. “You can’t eliminate tax breaks without creating tax shifts.”
House Tax Chair Dennis Lake, R-Blackfoot, noted that the panel will need to reach two-thirds agreement to recommend any changes to the Legislature. “I hope that all of the committee members come to the table with an open mind to do what’s best for the state of Idaho,” he said.
Several members said they wanted to find ways to reduce Idaho’s tax rates while broadening the tax system. Sen. Diane Bilyeu, D-Pocatello, said, “To me, it seems that if everybody paid a little bit that the revenues would be about the same.” Sen. David Langhorst, D-Boise, said if the panel decides that all current tax breaks should remain, “At least we and the Idaho public will know why our sales tax is 6 percent, and not 5, 4 or 3 percent.”
Rep. Jim Clark, R-Hayden Lake, said, “I think it’s about time, after 11 years, that we try to solve this problem … the issue of what an exemption should be.” Some kind of standard against which every exemption is measured would help, he said.
After pretty much everyone said how glad they were to be at the table and tackling the issue, House Majority Leader Mike Moyle, R-Star, said, “I guess I’m the only one that’s not happy to be here – I’d rather be on my combine, it’s harvest time.” But Moyle said his goal on the panel is “to have an open mind.”