Idaho House panel approves income tax cut

BOISE – A $125 million tax cut proposal got a thumbs up from the Idaho House Revenue and Taxation Committee Thursday, despite concerns from supporters that it doesn’t go far enough.

The measure, introduced by House Majority Leader Mike Moyle, R-Star, cuts Idaho’s individual and corporate income tax rates by 0.1 percent per year for six years, subject to certain conditions.

Each 0.1 percent reduction has an estimated $21 million price tag. The reduction applies to all tax brackets, so the top rate would drop from 7.4 percent to 6.8 percent – just under Montana’s 6.9 percent top tax rate – while the lowest bracket would drop from 1.6 percent to 1.0 percent.

“By lowering all the brackets, we’re covering all income levels,” Moyle said. “We aren’t punishing one group or another.”

Critics said tax cuts like this merely shift the burden to local communities and school districts, who have to raise levies to make up for tighter state budgets.

“For the past few decades, Idaho legislators have been operating under the philosophy that cutting taxes will somehow cause great prosperity and businesses will flock here,” said Donna Yule, executive director of the Idaho Public Employees Association. “But the facts tell a different story.”

Idaho ranks worst or near-worst in the nation in a number of economic categories, she noted, including median family income and percentage of minimum-wage jobs.

“Many of the policies we’re pursuing just aren’t working for Idaho families and workers,” Yule said. “If you approve this bill, it gives another nice tax break to the people who need it least. About 20 percent of state classified workers make less than $20,000 per year. I think it’s disgraceful that we’re talking about giving another tax break to people in the upper income brackets when we aren’t taking care of our own state employees.”