Tax-Cut Plan Passes House

The House passed a bill Thursday giving taxpayers a 3 percent credit on state income taxes.

The bill would cut a total of $40 million in taxes. All taxpayers would receive the income tax credit beginning with tax year 2000.

Self-employed taxpayers would receive a deduction for the cost of medical insurance.

The bill also would remove the burden of the “marriage penalty” and would increase the tax credit on investments.

“It makes no economical sense today to be doing this tax cut, knowing that there may be money that we have to pay when the judicial system tells us we have to,” said Rep. Charles Cuddy, D-Orofino, referring to a lawsuit filed against the state by several school districts.

Cuddy wasn’t the only legislator voicing concerns about spending money on a tax cut instead of on Idaho’s crumbling school buildings, but the bill was approved, 41-29.

Opponents of the bill said that while they are in favor of enacting some kind of tax break, they think this legislation goes too far.

“I’d rather have an Alan Greenspan soft-landing approach rather than kamikaze,” said Rep. Dan Mader, R-Genesee.

Rep. Jim Clark, R-Hayden, pointed to the stock market as the reason for his “no” vote.

Clark noted the decline in the stock market in January. “That’s called the `January barometer’ - whatever the market does in January sets the trend for the rest of the year,” he said. “I like the idea of (tax) cuts. The problem is: We have to be able to afford them, and we can’t afford this one.”

The bill is expected to be slimmed down in the Senate. One of the expected cuts is the 3 percent income tax credit, which would cost the state $26 million a year.

“The problem I really had with this legislation was that the $26 million was ongoing,” said Rep. Wayne Meyer, R-Rathdrum. “I could have supported the other three (tax cuts) and a one-time tax credit.”