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In the interest of fairness, Democrats should up the ante on tax cuts

In the interest of fairness, Democrats should up the ante on tax cuts

Fred Birnbaum
February 3, 2017
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February 3, 2017

Several days ago modest tax cut legislation was introduced before the Idaho House Revenue and Tax Committee. House Bill 67 sailed through the committee on a 14-2 vote, with only the two Democratic members opposing the bill. Following that vote, it passed the full House with only the Democratic caucus voting in opposition.The proposed tax cut applies to businesses and individuals alike; the cost of the tax cut: just over $50 million per year.

To put that in context, the governor’s proposed fiscal year 2018 budget increases spending $290 million over the current base budget. So, essentially, the tax cut is worth only about $1 for every $5.80 in new spending. That spending growth includes a three percent merit-pay increase for state employees, and maintains their generous pension and healthcare benefits – as well as some $160 million in new discretionary spending.

To put the generosity of the budget in perspective, a single state employee currently pays $58 per month for a traditional health insurance plan, with a $350 annual deductible and an out-of-pocket maximum cost of $4,300. Similar insurance (Blue Cross Gold 500) for a small business in Idaho would cost a middle-aged employee (45 years old) $469 per month, with a $500 deductible and an out-of-pocket maximum of $5,500.

Therefore, when Democrats like Minority Leader Rep. Matt Erpelding talk about this modest tax cut being unfair, we have to agree – sort of. Our position is: The tax reduction is far too modest to be considered fair to the average taxpayer, particularly in the context of the generous spending increase Erpelding is likely to support for state agencies. In fact, based on the rhetoric emanating from the Democrats, the governor’s proposed 9 percent general fund spending increase proposal is not enough.

A meaningful tax cut for Idahoans is an issue of fundamental fairness, and that should be at least $100 million, double the amount proposed in House Bill 67. Remember, ordinary Idahoans don’t have the protection afforded to state employees from the shock of increasing health care premiums.

The larger issue is the increasingly marginalized policy positions taken by Democrats in the Idaho Legislature. Given that they hold only 11 of the 70 seats in the Idaho House, some reflection is in order. To simply take the position that a slight reduction of the top income-tax rate -- a rate paid by the majority of filers who pay income tax -- is redistributive, shows what really is at work here: Idaho Democrats favor their own form of wealth redistribution – to state agencies and state employees.

Rather than saying no to a tax cut, Idaho’s Democratic lawmakers should take House Bill 67’s tax cut and raise the offer – perhaps proposing sales tax relief. This would demonstrate a real commitment to fairness.

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