A bill to cut Idaho’s top corporate and individual income tax rate overwhelmingly passed the House this afternoon.
House Bill 563 would cut the top individual income tax rate from 7.8 percent to 7.4 percent and the top corporate rate from 7.6 percent to 7.4 percent. It would cost the state an estimated $35.7 million in 2013.
Democrats and eight Republicans opposed the plan.
Democrats like Rep. Brian Cronin (D-Boise) were critical of who would qualify for the tax cut, saying the proposal isn’t targeted for the middle class. “It seems to be an article of faith around here at times, that if we give certain classes of people more money, that they will create jobs,” Cronin said. “What creates jobs, and by extension economic development, is demand.”
Eye On Boise blogger Betsy Russell reported earlier this week that about 18 percent of Idaho tax payers would get a tax break through this plan.
“That’s because the bill lowers rates only for those in the top individual income tax bracket – those with more than $26,760 in taxable income (not gross income). For a single person who doesn’t itemize and takes the standard deduction, that equates to a minimum gross income of $36,260 to start getting any tax break. For a married couple filing jointly with no dependents, it’s $72,520. For a couple with two children, it’s $79,920. That’s 108,397 of Idaho’s 600,000-plus individual income tax returns, or 17.83 percent of filers.” – Eye On Boise
Rep. Cronin said the Republican majority can’t claim to spur the economy when “18 percent of Idahoans, tax filers, will get this tax benefit.” He called the plan a “shell game.” Cronin said the state is underfunding education, infrastructure and other critical state programs.
Rep. Mike Moyle (R-Star) is sponsoring the tax cut bill. He and other Republicans
who support the measure said anytime the state can return money to taxpayers, it’s a good thing. “This is probably the best economic development bill you’re going to look at this year guys,” Moyle said.
Rep. Fred Wood (R-Burley) was one of eight Republicans who opposed the bill. He said House Bill 563 does some good things, but it’s premature. “I don’t think Idaho’s economy, today, is constrained by taxes,” said Wood. “I don’t think the tax relief afforded in this bill, at this point in time, is going to suddenly unleash our economy.”
House Bill 563 now heads to the Senate.
Do you support the plan to cut Idaho’s top tax rates? Would your household or business see a change?