Deep divide in House-Senate tax discussion…

A deep divide has emerged in the joint meeting of the House and Senate tax committees. After House Tax Chairman Gary Collins asked if members have a “target number” they’d like to get to on tax rates, Senate Tax Chairman Jeff Siddoway, R-Terreton, said, “I’ve spent quite a bit of time thinking about that. And to me the only way we’re going to get there is if we get rid of some of our deductions. And some of those can be pretty painful and affect a lot of people.”

“Quite candidly, that’s how Utah got there - they got rid of all their deductions on their income tax forms,” Siddoway said. “And I don’t know if we have that appetite. And the same thing if we were going to look at a reduction in our sales tax. The way you get rid of that is get rid of the exemptions to the tax. … So if we’re going to go there, if we are not happy with where we are now, if we don’t feel like we’re competitive, we’re not going to get there without sharing some pain.”  Siddoway added that some members are happy with Idaho’s current system of a “three-legged stool” that balances sales, income and property taxes to fund government.

House Majority Leader Mike Moyle, R-Star, countered, “I disagree with your assessment that we have to take and raise a tax somewhere else to lower a tax.” He said, “We’ve been growing government. … We can balance it out as the economy grows … giving a little piece of the pie back.” He added, “I have a real hard time when we have these meetings and say we’ve got to raise a tax somewhere else to lower a tax.”

Sen. Grant Burgoyne, D-Boise, said the question is whether Idaho’s tax rates are a “marketing issue” with regard to competition with other states, or whether Idaho wants to reduce its revenues to fund government. “I think that’s a break point for some of us,” he said.

Rep. Neil Anderson, R-Blackfoot, said, “We have one of the lowest overall tax burdens of any state in the country.” He said, “Taxes, as I understand it, is a means to an end, and the end is to fund the proper role of government. We also have to acknowledge that we need growth and we need to be competitive. … Frequently we hear a state like Montana is 6.9 percent (for income tax) so we need to get 6.9. But if we look at the economic growth in Montana the last few years, Idaho has consistently outgrown Montana.”

Anderson said he had a Utah accountant run taxes for families with similar incomes in both states, and even with Utah’s lower rate, the Utah family actually paid more.

Sen. Curt McKenzie, R-Nampa, said Anderson had a good point. “It should be transparent, predictable and broad,” he said. “You get too many holes in your three-legged stool sample, it starts to stink. We’ve got billions of dollars in holes in ours.”

Rep. Dell Raybould, R-Rexburg, said on the tax working group, “We had trouble agreeing what the problem was. … We went all over the board in our meetings last summer trying to define what is the problem, and if we have a problem, how do we solve it. Well, we never did come up with a problem, a specific problem, that was affecting not only new industry coming into the state but our present taxpayers.”

Sen. Jim Rice, R-Caldwell, said there should be more direction from the House and Senate tax committees, rather than an interim working group. “We didn’t get anywhere, but it’s because what we were doing is kicking around political footballs,” he said. “There’s no focus.”

Rep. Mark Nye, D-Pocatello, said he’d like to hear talk about needs, not just revenues. “It seems here in the Statehouse there’s a one-year plan, it seems to involve only cutting taxes and not filling needs.”

Rep. Jeff Thompson, R-Idaho Falls, said, “My sense is the momentum’s there for us to take the opportunity and really revamp the tax structure in the state of Idaho. I would just highly encourage us to have the interim tax committee and look at everything we can look at in that arena, so that we can have the best tax structure that we can, not only in the short term but in the long term as well.”