Members of the Idaho Legislature’s Tax Working Group were queried after their last meeting and asked to prioritize various proposals that have come before the panel; their answers were tallied up, and the results presented just now. The item that came out on top – the No. 1 priority – is to recommend that the Legislature consider legislation revising Idaho individual and corporate income tax rates.
The committee members offered some qualifiers to that idea, with some saying any changes should be revenue-neutral, and rate cuts for upper brackets should be offset by cutting exemptions; some saying low-income taxpayers should be protected; and some saying it must be done in way that ensures a competitive business market for the state.
Tied for second and third priority were proposals to recommend drafting legislation to increase the exemption from business personal property tax, per county, from the current $100,000 to $250,000; and a recommendation that the House and Senate tax committees hold joint hearings during the legislative session.
Coming in fourth was recommending that the Tax Working Group be formalized by statute or concurrent resolution; and fifth, recommending that the House and Senate tax committees review and revise or eliminate some of Idaho’s sales tax exemptions.
Rep. Janet Trujillo, R-Idaho Falls, said she found all the presentations to the committee helpful. She said if the state gives tax relief to businesses, it should look at how that can be channeled into something that boosts education, to help businesses get the educated workforce they need.
Sen. Grant Burgoyne, D-Boise, said, “I agree with some of that. I do think there are some things about education and having a better prepared workforce in Idaho, that lend themselves to public-private partnerships. ... The income tax code lends itself to the use of deductions, credits for the financing of certain educational opportunities, whether that’s preschool or K-12 or higher education. So I think that’s an interesting thing to think about. … We know we have some issues in higher ed with workforce alignment.” A system of tax credits that encourages people or businesses to set up grants or programs could help, he said.
Sen. Abby Lee, R-Fruitland, said, “I don’t dispute the priorities here. I think these are things we know are political realities.” She said she still hopes for breaks for small businesses and rural communities that have been stepping up to fund education through property tax levies.
Rep. Mat Erpelding, D-Boise, said hearing the presentations to the committee has cemented his desire to move forward with collecting sales taxes on online sales. “We could start collecting revenue that’s already owed, that’s slipping through the system,” he said. Erpelding said he favors using that money for tax relief, as required by a bill that passed with his support two years ago; that way, Idaho could give tax relief without hurting school funding. “We could get a win-win out of this,” he said. Rep. Dell Raybould, R-Rexburg, said he’d like to know more about the experience of other states that have signed on with the streamlined sales tax project, which is aimed at easing those collections.
Nine of the 12 working group members responded to the survey about priorities, and seven of those gave numeric ratings. Two just provided comments on the various ideas.
Rep. Robert Anderst, R-Nampa, said, “After hearing all the presentations … I still support the idea of some measured reductions, maybe based on growth, in the top rate or maybe the top two rates. … Do it smart. … Our revenues are growing, and with that growth, we should be able to live on a lower percentage of Idahoans’ income. I still support the three-legged stool. I think that stability is good for business, I think it’s good for budgeting and for us.”
Sen. Jim Guthrie, R-McCammon, said he thinks income tax is “probably the most fair place to apply any kind of tax relief consideration.” He cautioned against further business personal property tax cuts unless counties’ revenue losses can be fully made up, to avoid the kind of funding shifts that followed the 2006 change in school funding in Idaho.
Burgoyne said he’s not opposed to lowering rates, but doesn’t want to lower “effective rates” – meaning any lowering of rates should be accompanied by broadening the base on which the tax falls. He also called for re-examining the school funding decisions that have led to schools asking voters for supplemental property tax levies every two years.
Rep. Gary Collins, R-Nampa, co-chair of the panel, said, “I feel that probably this year or in years to come, there will continue to be a hard push to take a look at the sales tax on groceries, food. ... I do feel that the sales tax is a very regressive tax, especially for the low-income people in our communities.” He said, “I think if we opened the door and let the public in, I think that would be one of the taxes that the people, especially the lower-income people, would be addressing.” He said he’d like the panel to develop “firm figures” on what that would cost and how it could be done, prior to the start of the legislative session.