Lawmakers: Long-term vision needed on tax policy
The Legislature’s Tax Working Group is back in session, to discuss four proposed tax-cut bills. “These are just drafts. We’re not here to finalize a piece of legislation,” said Co-Chair Rep. Gary Collins, R-Nampa. “We’re not here to take any votes, per se, on anything. We just would like to get a feel of where the committee thinks we might want to head.”
Collins, who chairs the House Revenue & Taxation Committee, said he and Senate Tax Chairman Jeff Siddoway, R-Terreton, have agreed to hold combined meetings during the legislative session, probably early in the session.
With that, he opened the floor to working group members.
Sen. Lori Den Hartog, R-Meridian, said, “I was hoping that we would be able to articulate a vision for our tax policy in the state of Idaho and where we wanted to go. We talked a little bit about trying to avoid the end-of-session train wrecks that we’ve seen in previous sessions. I think that’s because we don’t have a vision. ... We have people who want certain things out of our tax policy, and may push that.” She said, “I think the proposals we have before us each have their own individual merits. I don’t see how they fit into an articulated plan for our tax policy.” Den Hartog said at this point, she wouldn’t support any of the proposals except taking the sales tax off of groceries, because she said that would help offset this year’s legislative action raising gas taxes and vehicle registration fees, with both affecting Idaho families.
Sen. Abby Lee, R-Fruitland, said, “While many of these things have merit, I would like it to be part of a systemic tax policy.” She said lawmakers should think about services being provided as well as taxes being charged and exempted, and how they all weigh against each other. “These individual pieces perhaps have merit,” she said. “I really like the idea that we tie something to economic indicators where if we have growth, we have relief, if we don’t, we have stability. … We’re not going back to this crash that we had a few years ago.” She said a systemic plan – “like what we’ve done with education” – would require lawmakers to “be patient and be thoughtful about a philosophy of how we’re taxing Idahoans.”
Rep. Janet Trujillo, R-Idaho Falls, said she believes “looking at our income tax rates and bringing them down” is the panel’s “highest priority … offering relief to stimulate our economy, to get some things going.” But she said she hoped the plan would be “revenue neutral” and “not hurt lower brackets,” and said she wasn’t sure the current draft bill accomplishes that.
Rep. Robert Anderst, R-Nampa, said, “I’m going to continue to look for opportunities to lower the rates based on growth. At this point I don’t think I support the idea to remove sales tax on groceries,” after hearing from other states including Utah that that can have “long-term effects in destabilizing the revenue stream. I think there’s significant concerns, that we should listen to their experience.”
Collins asked Legislative Services Director Eric Milstead to review the priorities the committee members identified earlier through a series of informal polls; Milstead did so, and noted that reviewing exemptions came out last on that list. Collins said he thought that work laid out something of a vision for the panel on tax policy.
Sen. Grant Burgoyne, D-Boise, questioned whether “we need to do anything.” He said, “First, do no harm. We don’t want to screw things up. If that means we need to take a slower or more deliberate approach, I think there’s value in that. … Ultimately to me, the priority is preserving good and getting to better tax policy.” Burgoyne said, “Taxes exist to raise revenue.” That means money comes out of people’s pockets, he said. “The second thing is they’ve got to be fair. And the third thing is it’s good for everybody in our community, whether it’s business or individuals, and for the government services that need to be funded, that it be stable.” He noted the priorities the Idaho Chamber Alliance listed today, with workforce training at the top, and said lawmakers should pay attention.
Burgoyne said from what he’s hearing, Idaho’s statutory income tax rate is a problem, but its effective rates are not. “My position is that we should make it revenue-neutral, keep effective rates the same. What seemed in part of get our whole group started was the issue of Utah’s flat tax.” He said in his view, Idaho already has a flat tax like Utah’s. Although there are different rates, “At a very modest level of income, everybody is paying the same rate.”
He said he “would like to look very seriously at this personal property tax issue,” but said, “I’m not sure this is the year to do it.”
Trujillo listed the top income tax rates of several surrounding states that are lower than Idaho’s, and said, “We stick out like a sore thumb.” She said, “There are many areas right now where Idaho sticks out like a sore thumb compared to surrounding states, and that’s where we’re broken.”
Rep. Dell Raybound, R-Rexburg, said joint meetings between the House and Senate tax committees early in the legislative session "would be a great advantage," and said, "We'd be way ahead." All lawmakers would get to hear from the public, including those who would benefit from tax changes, early in the process, he said “so that we all get the same message, both in the House and Senate, and we can then propose a tax structure that will not only be beneficial to the taxpayers, but then will also be beneficial to the economy in the state of Idaho.”
Sen. Steve Vick, R-Dalton Gardens, said, “Idaho in comparison to a lot of states has lower overall tax rates.” He said he favors simplicity in changing Idaho taxes. “Big tax changes: Who creates the momentum to do that?” Vick asked. “We heard from the Chamber today that they have some ideas. Maybe the Chamber can do it. Just going off my recollection, looking at what other states have done … most major tax policy change starts at the top with the governor, and if the governor’s not interested, that makes it very difficult to make any significant changes in tax policy, if he’s not taking the lead.”
Vick said as for specific bills, he favors eliminating the grocery tax. “It seems clear that the public supports eliminating the grocery tax. Is that the best tax policy? In some ways I think it is. In other ways I have questions,” he said. But he agreed that it would benefit those who are paying increased gas taxes under new 2015 last. “Eliminating the grocery tax is simple … it simplifies our tax code, it’s something people understand, something people directly benefit from, and they seem to be in support of.”
Sen. Jeff Siddoway, R-Terreton, said, “What was discussed here today, the four drafts, are things we probably will take a look at this legislative session. And there are things that are probably doable in the short term.” But he said much will depend on the budget and the governor’s priorities. Siddoway said he's still interested in reviewing all existing exemptions. "There's still a lot of opportunity to come up with some proposals to try to revise our system and make it more fair. ... We've been maybe too generous with those exemptions," he said. "Perhaps that's one thing, if we felt like we had the time, and we're going to have the opportunity in the future to go forward with this group, then we could really get down in the weeds and start to look at some of those things."
Rep. Thomas Dayley, R-Boise, said, “Tax policy, what we do here and what we say here, affects individuals and businesses.” He said the impact of a grocery tax elimination would be different in a state bordering a non-sales tax state, and would be different for households of different incomes. What’s needed, he said, is good information on which lawmakers can base their decisions.
Collins said, "I like to think over the years we've all gained a lot of knowledge, and we've made some decisions we thought were far-reaching and we found out they weren't that far-reaching." He called the joint tax working group's sessions "a real benefit" to lawmakers from both houses. "I think it's good for us to have got together to look into some topics that we wouldn't normally address through our normal germane committee meetings and such. We as a task force, we weren't really given an overall goal that we were supposed to meet," he said. "At least my leadership told us to look at things, and if we came up with things," the Legislature could look at them. "We'll go back on both sides and talk with our leadership ... and our caucuses," Collins said. A key, he said, will also be "where the governor is at ... because if he isn't on board with something, a lot of times we're just spinning our wheels."
