The House this morning is debating HB 67, the tax-cut bill. House Majority Leader Mike Moyle, R-Star, opening the debate, said, “When businesses come here, they look at that top income tax rate.” His bill would lower the top personal and corporate income tax rates from 7.4 percent to 7.2 percent, plus exempt the first $750 in taxable income. Its fiscal impact is estimated at $51.2 million less for the state’s general fund every year going forward.

Moyle said Idaho has the third-highest top income tax rate west of the Mississippi. “If you want the businesses to come here to bring the jobs that grow the economy, you’ve got to be competitive,” he said. “This isn’t a big step. I wish it was bigger, but it’s a step in the right direction.”

Moyle noted that Idaho’s top personal income tax rate kicks in at a lower income level than other states like Oregon; almost half of Idaho’s taxpayers are in that top bracket.

“Everyone in this room realizes … the most important thing we do here is take care of education,” he said. “It’s still my top priority, and I’m sure it’s still yours. We can do both.”

Rep. Ilana Rubel, D-Boise, spoke at length against the bill. She said Idaho should expect to have big costs if Congress repeals the Affordable Care Act, and it’ll be sorry if it’s already given the money away in tax cuts. Plus, she said the state has big education needs it can’t fund now, including losing teachers to bordering states that pay much higher salaries. “We are really not in a position where we can have it all,” she said. “We could be putting really important education objectives in very serious jeopardy.”  

Rubel also contended that the tax cut would largely benefit the wealthy who don’t need it, and noted the recent BSU statewide policy survey that found little support for further tax cuts. “Some may call this bill starving the beast, but I think it’s starving our future, and I would ask for your no vote,” she said.

Rep. John Gannon, D-Boise, cited an array of figures to show that Idaho’s income tax compares favorably to other western states despite its rate, because of the state’s significant standard deduction and exemptions, making a substantial portion of income exempt before the tax starts applying. Gannon argued that Idaho would be better off with a tax bill that reforms the state’s tax system and closes loopholes but doesn’t change the revenue collected. “We could probably have a revenue-neutral bill and a lower tax rate. … Reform our tax system so that everyone is paying, and those who do pay, pay a little less.”  

Rep. Ryan Kerby, R-New Plymouth, a retired school superintendent, said he favors lower taxes, but his constituents complained that in his first term, the Legislature raised the gas tax. He also noted recent increases in education funding. “We’ve been very generous, and it’s not like we’re not going to keep funding education this year and the next year,” Kerby said. “I think it’d be prudent at this time to slow government just a slight bit.”

Rep. Phylis King, D-Boise, said, “What business wants is an educated workforce. They don’t want a tax break.” 

Rep. Kelley Packer, R-McCammon, spoke in favor of the bill. "I've really been torn over this, because at the heart of the matter, I believe we all need to be frugal," she said. "But I do think we need tax reform." Packer said, "I do think we could do more. I think we could look at this in a better way. I think we should reform our tax brackets, I think we should look at our exemptions. I think we as a body should take this seriously." She added, "I will support this because i think it's a step in the right direction," but hopes for more work on reform.

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