The House Revenue & Taxation Committee has voted 14-2, a straight party-line vote with all Republicans in favor and both Democrats dissenting, in favor of HB 67, Rep. Mike Moyle’s bill to lower Idaho’s top personal and corporate income tax rates from 7.4 percent to 7.2 percent and also exempt the first $750 of taxable income from the Idaho income tax. The bill now moves to the full House for a vote.
“The fact of the matter is Idaho’s income tax rate is out of whack,” Moyle told the committee. “Every one of your chambers has said … we need to look more competitive on the balane sheet. We need a lower income tax rate.” The bill’s fiscal impact is estimated at $51.2 million less for the state’s general fund every year going forward.
House Minority Leader Mat Erpelding, D-Boise, said it’s “a lie” that Democrats don’t support tax cuts. But he said right now, Idaho can’t afford to maintain its transportation infrastructure and other pressing needs. “The reality is there’s a right time for everything, and this isn’t the right time,” he said.
Rep. Stephen Hartgen, R-Twin Falls, said, “The economy is doing pretty well. If this is not the time for a significant tax decrease, I don’t know that there’s ever a time.”
Rep. Ron Nate, R-Rexburg, said he wanted bigger tax cuts. “This tax bill is weak sauce compared to what we can be doing,” he said.
Several people testified both for and against the bill. Donna Yule, executive director of the Idaho State Employees Association, said, “With this bill, those of us with incomes of $418,000 or above would see a $1,562 tax cut on average. The average Idaho household, where most of us are, $38,000 to $59,000, would see a $32 decrease in our tax liability - $32.” She noted the recent BSU public policy survey that found little support for further tax cuts. “Most Idahoans feel it is more important to invest in other areas such as education and infrastructure,” she said.
Elinor Chehey of the League of Women Voters of Idaho said, “These are not tax reductions, they’re tax shifts.” She said while state taxes have been cut $1 billion in the past 10 years, school supplemental levies approved by voters have totaled more than $1.5 billion in the same time period. “That’s more than one and a half times the money saved in state taxes,” she said.
John Watts of the Idaho Chamber Alliance, which represents 19 local chambers of commerce in Idaho, spoke in favor of the bill. “Lower income tax rates will position Idaho to be more competitive in regard to our surrounding states and stimulate our economy,” he said.
Miguel Legarreta of the Associated Taxpayers of Idaho said that group calculated that for a typical Idaho family, which it calls its “Spud Family, the bill would mean a 2.5 percent reduction in their state income taxes, or a $77 cut. That’s assuming a family of four with income of just over $82,000 a year. Idaho’s median household income was $48,920 in 2015, according to U.S. Census data; that ranked 40th among the 50 states.“This tax cut proposal provides moderate relief for the majority of Idahoans and Idaho businesses,” Legarreta said.
Moyle said he’s all for funding schools, and considers them his top priority. “Listen, I support schools as much as anybody in this building, and I think any one of you would probably say the same, we all care about schools,” he said. He said supplemental levies are happening in part because it’s a local choice. “But when we get done … taking care of our schools, there’s still a bunch of money left,” he said. “You could give back to the taxpayers and still meet our commitments to education, which I think is vitally important.”