The Idaho Legislature adjourned an 81-day legislative session Thursday shortly after passing a bill to lower corporate and individual tax rates—a move that is anticipated to leave $35.7 million in the hands of taxpayers and out of government coffers.
Both the top corporate and individual tax rates will go to 7.4 under House Bill 563, which passed the Senate 28-7. The bill now goes to the governor, who supports it. Only the Senate’s seven Democrats voted against the measure.
Senate Assistant Minority Leader Chuck Winder of Boise said the bill will help Idahoans and make a statement about Idaho’s willingness to make itself attractive for business. Idaho’s tax rates are higher than its neighboring states. The corporate tax rate is 7.8 percent. The top individual rate is 7.6 percent.
Winder said the tax cut will make a difference—making the state more attractive to businesses and helping individuals buy products like groceries and gasoline.
“It will have a significant impact, and it will help the people that need it, and I believe it will help create jobs,” Winder said. “If we put it into savings, it will create zero jobs.”
Sen. Nicole LeFavour of Boise, who is leaving the Senate to run for the Democratic nomination for Idaho’s 2nd Congressional District, said Idaho’s willingness to cut taxes has created “a perpetual budget crisis” and the state’s economy would be better served by the Legislature spending money to sustain government programs and employees.
Sen. Elliot Werk, D-Boise, said the tax cut would only benefit top wage earners, and that the cut to corporate rates is purely symbolic.
But Sen. Melinda Smyser, R-Parma, disagreed. The money should go back to the taxpayers. “They know better than the government” how to spend the money, Smyser said.
“I know there’s all kinds of talk about ‘is this going to create jobs, is it not going to create jobs,’” said Senate Pro Tem Brent Hill of Rexburg. But the big issue, he said, is that Idaho is not competitive in tax rates. “I don’t know how much more business this will bring in to Idaho by reducing rates. But I do know … that it will be less of a disqualifier.”
The Senate’s tax committee chairman, Tim Corder, R-Mountain Home, who originally opposed the bill in committee, voted in favor.
On the spending side, the Legislature approved a general fund budget of $2.7 billion, an increase of 6.8 percent, or about $173 million more than the budget set a year ago.