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Iowa gets singled out for ‘bold’ tax relief while Idahoans make do with high rates

Iowa gets singled out for ‘bold’ tax relief while Idahoans make do with high rates

by
Wayne Hoffman
January 20, 2022
Wayne Hoffman
Author Image
January 20, 2022

There’s a reason I wrote that the first order of every legislative session is to cut taxes. The money being taken from us is our money. We earned it. But collectively, we are being robbed of it. 

Gov. Brad Little’s income tax proposal is welcome news, as I said previously, but it just is not enough and not focused on the right outcomes. 

If lawmakers had spent any time deliberating on where Little’s proposal puts Idaho taxpayers, they’d realize that it’s a fraction of what they can and should do. 

Idaho’s top marginal tax rate is 6.5 percent. The governor’s plan, contained in House Bill 436, would drop the top rate to 6 percent. 

But that new rate is still 50% higher than what Idahoans paid when the progressive income tax was first implemented in 1931, which was partly an effort to reduce property taxes. Now, Idahoans suffer both taxes and pay a higher income tax rate than they did nine decades go. 

Maybe Little will present another bill that will make additional rate cuts. He hinted that could be the case in his speech to lawmakers on Jan. 10, when he outlined a 5-year, $1 billion tax reduction plan. The bill that passed the House on Thursday cut $600 million. It’s not what you’d call “bold” tax relief, at least so far.

But “bold” is how the Wall Street Journal editorial board describes the plan by Iowa Gov. Kim Reynolds to get to a 4% flat individual income tax and a 5.5 percent corporate rate. The editorial board said Reynolds’ thinking “has helped Iowa’s economy and competitiveness, and the state is setting a good example for others.”

However it’s not just the economy and competitiveness that’s at stake here. It’s the fact that taxation is theft, pure and simple. The public should rally against how much money is extracted from us, under force of law and threat of jail if we don’t comply with the demands of our own government, even if we object to how the money is being spent. It’s immoral. 

That’s the real reason why taxes need to be cut, and boldly so. The Wall Street Journal isn’t lauding Idaho’s efforts because it’s not bold. Not yet. Getting the tax rate to be as close to zero as possible, or matching the eight states with no income tax is bold. 

“Bold” is what Idaho could get to with a bit more work. That would also require scaling down Little’s budget proposal. Apart from the fact that Little wants to shovel another $200 million into the state’s rainy day account, the governor’s budget is loaded with spending  at a bigger level than he or the media have reported. IFF legislative affairs director Fred Birnbaum calculated [<<hyperlink] that the governor’s plan hikes government spending by more than 17 percent year over year. 

Bold is achievable. We’ve had lower taxes than this before, and we can again, with a governor and a Legislature willing to work toward the morally defensible objective of ending legalized theft.

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