Tax cut bill would cut $35 million permanently for top earners
Under legislation introduced in House Rev & Tax this morning, Idaho would cut $35 million in corporate and individual income taxes permanently, starting next year. "This is a start," said House Majority Leader Mike Moyle, R-Star, reports the Associated Press. "This sends a good message for the state of Idaho as we try to attract more businesses here ... and to get Idaho to be more competitive with surrounding states." Click below for a full report from AP reporter Todd Dvorak; this legislation, which next will have a hearing in the House committee, is co-sponsored by Gov. Butch Otter, who challenged lawmakers at the start of this year's session to come up with $45 million in unspecified tax cuts.
Idaho House committee introduces tax relief bill
By TODD DVORAK, Associated Press
BOISE, Idaho (AP) — House lawmakers on Friday took the first step toward providing more than $35 million in tax relief to individuals, small businesses and corporations.
The House Revenue and Taxation Committee voted Friday to introduce legislation aimed at cutting the state's top individual income tax rate from 7.8 percent to 7.4 percent, a reduction that would save individual taxpayers and small business owners $30.9 million next year. The measure would also reduce the corporate income tax rate from 7.6 percent to 7.4 percent, saving some of Idaho's biggest companies an estimated $4.8 million.
The projected $35 million in tax relief falls short of the $45 million proposed by Gov. C.L. "Butch" Otter last month, but Otter and his staff worked with Republican leaders on the measure and are urging lawmakers to get behind it.
"This is a start," said House Majority Leader Mike Moyle, R-Star, the chief sponsor of the measure. "This sends a good message for the state of Idaho as we try to attract more businesses here ... and to get Idaho to be more competitive with surrounding states."
With Idaho's revenue picture improving, Republican lawmakers say they can afford to engage in serious debate about providing tax relief to individuals and businesses.
On Friday, legislative budget writers approved revenue targets for fiscal year 2013 that slightly undercut Otter's forecast. The Joint Finance Appropriations Committee agreed on a 4.5 percent increase in revenue in 2013 compared with 2012 and projected total state revenue at $2.6 billion, up from the $2.55 billion in 2012 yet $33.3 million less than Otter's total revenue projection for the coming fiscal year.
Rep. Dennis Lake, chairman of the Revenue and Taxation Committee, said the $35 million target sought in the tax relief bill for now reflects a more cautious approach to the state's overall revenue picture. Other tax relief measures could emerge in the coming weeks, Lake and Moyle said.
Lake also said lawmakers face a challenge balancing tax relief with some other priorities spelled out by Otter and legislative leaders, including restoring money to teachers' salaries and offering pay raises to state workers.
"Tax relief should be the last decision we make, not the first," Lake said after the committee's voice vote.
Reducing the top individual rate to 7.4 percent would cut the tax rates for 19 percent of all taxpayers who file jointly, according to figures from the Division of Financial Management. The reduction would also lower taxes for 16 percent of those who file individual returns, which includes the majority of Idaho's smaller businesses, according to DFM.
Compared to neighboring states, Idaho's top individual income tax and corporate income tax rates are higher than Montana's and Utah's. Wyoming and Nevada do not tax in those categories.
Alex LaBeau, the top lobbyist at the Idaho Association of Commerce and Industry, said the $35 million in proposed tax relief marks a good point to begin a broader discussion about reforming Idaho's tax policy.
LaBeau, and the industry and business leaders he represents, contend the best way to stimulate economic development in the state is to wipe the personal property tax on businesses off the books. Earlier this month, LaBeau told a joint panel of the House and Senate tax committees that the $130 million personal property tax on business equipment has been a drag on economic growth and job creation.
"This starts the discussion," LaBeau said. "This represents $35 million worth of help."
Copyright 2012 The Associated Press.
