The talk of raising, lowering and changing various taxes in the state has already started with a couple of weeks before the 2012 legislative session kicks off. Each lawmaker I spoke with said Idaho’s corporate and income tax rates could stand to be lowered. Many differed on when and how to do it.
Idaho’s corporate tax rate is 7.8 percent and the individual rate is a graduated system ranging from 1.6 to 7.6 percent. Many Republicans, including Rep. Mike Moyle (R-Star) say Idaho’s tax rates are hurting private sector growth. “We’re higher than every state around us,” Moyle says. “Which is not a good place to be when we’re trying to get businesses and jobs to come here.” Moyle is working on a bill for the 2012 session to lower Idaho’s tax rates. He wouldn’t get into specifics.
It’s true Idaho’s tax rates are higher than neighboring western states, with the exception of Oregon and California. But Idaho does offer dozens of tax exemptions and tax credits in an effort to offset that base rate. “We’re giving away the store to the benefactors of the majority party,” says Sen. Elliot Werk (D-Boise). “The idea of cutting corporate taxes could be beneficial, the only problem is we need to be able to pay for that.”
Senate President Pro-Tem Brent Hill (R-Rexburg) says proposals to lower taxes this session will be met with resistance, and will likely require a trade-off in order to pass muster. “If we lower the tax rate, for small businesses as well as corporations, I think you’ll see we’ll have to phase out the investment credit at the same time we lower the rate,” says Hill.
Governor C.L. “Butch” Otter says the state’s revenue outlook needs to change for the positive before tax rates can start to go down. “If the sun starts shining a little brighter on our economy, and we start seeing some turnaround in the present trend, my preference has always been [to lower] the individual income tax,” Otter says. “We take it down to match the corporate level…and then lower the two together.”
One Democratic lawmaker is working on a proposal to lower Idaho’s sales tax rate and replace that lost revenue by eliminating 21 tax exemptions. The Idaho Statesman reports Rep. Shirley Ringo (D-Moscow) is reviving a plan to cut the sales tax from 6 percent to 5 percent. She introduced a similar bill in 2011 but it didn’t get a hearing.
Lawmakers seemed to say everything will be on the tax-table in 2012, as the state begins to make its way out of the recession and decreased revenue. We’ll all have to wait until lawmakers sine die to see what passes.