Tax cuts trim state burden

BOISE – The record 2001 tax cut dramatically reduced the tax burden in Idaho, dropping the state’s national ranking to its lowest level since 1986, a new study has found.

The annual analysis by Tax Commission Policy Manager Alan Dornfest, based on Census Bureau statistics, showed the permanent tax reduction changed the state’s tax burden from slightly higher than the average nationwide to markedly lower.

In 2000 before the tax cut, the Idaho tax burden was 1 percent higher than shouldered by the average American taxpayer. In 2002 it was 4.6 percent less.

That dropped the state’s national ranking from 20th in 2000 to 38th in 2002.

Had the state tax structure imposed the nation’s average tax burden, Idaho would have raised $159.2 million more than it did, based on total income in the state, Dornfest wrote in the report.

The tax structure raises about $2 billion in general revenue, $1 billion in property taxes financing local governments and another $250 million in motor vehicle taxes devoted to roads.

The report does not include the impact of the temporary two-year penny increase in the sales tax, which was not approved until 2003. The comparison for 2003 will not be issued until next year, but based on the figures, the extra penny apparently pushed the tax burden back to average or slightly above.

Republican Rep. Dolores Crow, of Nampa, the House tax committee chairwoman who aggressively pushed for the 2001 tax cut and adamantly fought the 2003 temporary tax hike, said Wednesday she has no plans for change, and that includes making sure the penny sales tax expires on schedule next July 1.

“Our economy’s coming back up, but we’re not really stable yet,” Crow said. “We need to live within our means until we see where we’re going.”

While lawmakers have generally followed Gov. Dirk Kempthorne’s multiyear plan to keep the state budget balanced without another round of deep budget cuts, the $100 million one-time surplus they have built to help fill the void when the sales tax expires is still seen as inadequate by advocates of education and other state programs.

But talk about rolling back the tax cut to funnel more cash to schools was never seriously considered, and the leaders of the huge GOP majorities in both the House and Senate see no sentiment to tinker with the structure.

“I’m still skittish about the economy, with the huge deficit on the federal level that’s going to drive interest rates up and high fuel costs,” House Speaker Bruce Newcomb said. “It’s better to keep things this way until we’re sure the economy has recovered.”