What Idaho Lawmakers Know – And Don’t – When Making Tough Tax Policy Decisions

Molly Messick / StateImpact Idaho

Mike Chakarun is tax policy manager for the Idaho State Tax Commission.

A left-leaning tax policy group recently put out a short little report about the state corporate income taxes paid by IDACorp. That’s the holding company of Idaho’s largest electric utility, Idaho Power.  The report claims IDACorp paid no state income taxes nationwide from 2007 through 2011. It led StateImpact to a larger question: What information do lawmakers have when they make big tax policy decisions?

Here’s the full transcript:

MOLLY MESSICK: Idaho Power is the company that stands to gain the most if Idaho’s tax on business personal property goes away. That’s one reason to follow up on the Institute on Taxation and Economic Policy’s claim that IDACorp paid no state income taxes over a recent five-year period.

MATT GARDNER: If you’re going to repeal the personal property tax, you should have a pretty good handle on the health of the state corporate income tax as you do it.

That’s the organization’s Matt Gardner. He says Securities and Exchange Commission filings indicate that not only did IDACorp pay no state income tax nationwide. In fact, the company got money back.

GARDNER: Over the five-year period, they got a $7 million state income tax rebate. What that means is that the effective income tax rate the company paid is minus 1 percent.

MESSICK: Idaho Power says the report doesn’t show the full picture. In a written statement, the company doesn’t directly address IDACorp’s effective income tax rate, but does say it paid tens of millions of dollars to the state in generation, sales and property taxes over the period.

The bigger point raised here is just how hard it is get a handle on what a company’s overall tax burden looks like. Michael Chakarun is the tax policy manager for the Idaho State Tax Commission.

MICHAEL CHAKARUN: We’re not allowed to disclose specific tax return information. We have very strict disclosure laws that we have to follow.

MESSICK: Taxpayers’ privacy is taken seriously. Even within the Tax Commission, information is only shared on a need-to-know basis. Chakarun came to our meeting with a bound copy of Idaho Code in hand.  He flips to the section that relates to divulging income and sales tax information.

CHAKARUN: Basically, the statute says that we cannot release return information, and it’s income tax information, declaration of estimated tax, claims for refund, amended tax returns…

MESSICK: He goes on for the better part of a minute, and starts to smile as he runs short of breath.

MESSICK: That’s quite a list!

CHAKARUN: Yes, indeed. And the penalties can include either getting fined or spending time in jail.

MESSICK: All of that said, state statute does make a special exception for lawmakers.

CHAKARUN: Any duly constituted committee of either branch of the state legislature have the right to inspect returns on request. No one in our policy or legal department has ever been here or been around when a committee has actually asked for that information, so it’s happened very, very infrequently if at all.

MESSICK: In other words, lawmakers are generally making tax policy decision without an overview of companies’ tax burdens. I put that to Senator Jeff Siddoway (R-Terreton), chairman of the Legislature’s Local Government and Taxation Committee. We met last Thursday, just after the Senate wrapped up six hours of debate on the wisdom of a state-based health insurance exchange.

JEFF SIDDOWAY: You know, we’re just common old folks like everybody else out there and we come over here and try to do the best we can. And after a day like today I feel like I have information overload! I’ve got way too much!

MESSICK: Siddoway says it’s true that lawmakers don’t have a good sense of the total tax picture for individual companies when they make decisions about tax exemptions or cuts. But he says for him the question isn’t about how much any one company – Idaho Power or any other – pays to the state. In the case of the personal property tax, for example, his focus is this: Will getting rid of it help Idaho’s economy?

SIDDOWAY: We’ve got to be fairly confident that if we do make that tax relief, people are going to come to Idaho and invest, and the people that are already here are going to expand. I guess you’ve got to be a believer before you even start on this trail.

MESSICK: Siddoway is a sheep rancher. In his own business, he says, he makes a dozen decisions a day. But lawmaking is a much slower process. Siddoway says that’s probably a good thing. He believes that through study and deliberation and debate, the important information comes to the surface, eventually.

For StateImpact Idaho, I’m Molly Messick.