On Tuesday, members of the Idaho House Revenue and Taxation Committee approved a $51 million tax cut for Idaho families and corporations.
The plan, sponsored by House Majority Leader Mike Moyle, R-Star, would cut Idaho’s top tax bracket from 7.4 percent to 7.2 percent. That would reduce rates for individual filers, as well as corporations.
The plan would also exempt the first $750 of a worker’s taxable income from state taxes.
Members of the House Revenue and Taxation Committee approved the bill on a 14 to 2 party-line vote.
A feisty Moyle pitched the proposal as a spark to further stimulate Idaho’s economy and draw businesses to the state.
“The fact of the matter is, the income tax rates in this state are too high,” the majority leader said. He added, states that surround Idaho offer much more attractive tax rates, and some don’t collect income taxes from individuals and businesses.
Seeking to preempt criticism, Moyle assured committee members the plan would still allow legislators to spend big on public schools and other government programs.
“There’s plenty of room for us to take care of education,” Moyle said.
Criticism came immediately, for different reasons.
Rep. Ron Nate, R-Rexburg, suggested the bill falls far short of what legislators could do for Idaho families and small businesses.
“There is a lot of money floating around the capitol right now,” Nate said. “If $51 million is all we can provide, we may have failed the taxpayer in some way.”
He urged his colleagues to examine further tax reductions, or the elimination of Idaho’s tax on groceries.
Rep. John Gannon, D-Boise, suggested the Legislature close sales tax exemptions before lowering rates.
Moyle fired back, telling Gannon that though talk of closing tax loopholes is “an easy soundbite,” but vested constituencies vigorously defend their breaks in Idaho’s tax code.
House Minority Leader Mat Erpelding, D-Boise, criticized the cut as irresponsible. He said legislators should invest in roads and bridges before cutting taxes.
“The reality is, there’s a right time for everything,” Erpelding said. “I don’t think this is the time.”
The proposal won support from the Idaho Chamber Alliance, whose lobbyist, John Watts, said the bill is “a step in the right direction” to draw businesses and investment to the state.
Donna Yule, executive director of the Idaho Public Employee Association, said Moyle’s tax cut would endanger funding needed to pay government workers competitive rates. She also criticized the plan as a tax cut for the wealthy.
A family of four would need to earn just more than $39,000 a year to fall into Idaho’s top tax bracket.
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