A bill to cut taxes for Idahoans who earn more than $7,200 each year cleared the House Revenue and Taxation Committee Monday, and even earned the support of one Democrat.
Rep. Dan Rudolph, D-Lewiston, broke ranks with his fellow Democrats to support the plan, which would cut income taxes by $22 million.
The plan, written by House Majority Leader Mike Moyle, R-Star, would also increase Idaho’s grocery tax credit by $10 for Idahoans who don’t qualify for the tax cut. That expansion would equal $5.8 million.
Moyle’s proposals would reduce income tax rates for top earners -- those who make more than $11,000 a year -- from 7.4 percent to 7.3 percent. That, he said, would better position Idaho to compete with surrounding states for jobs.
“We’re not competitive,” Moyle said, noting several states that border Idaho either have no income taxes, or boast rates lower than the Gem State.
“That income tax rate is a limiting factor,” Moyle told the committee.
The proposal won support from the Idaho Chamber Alliance and fringe political candidate Harley Brown.
The Idaho Roundtable Against Hunger, the Idaho Public Employees Association, and the League of Women Voters spoke against the proposal, each cited school funding as a main reason for opposition.
IPEA President Donna Yule told committee members she’d rather see her personal portion of the tax cut -- she estimated it at about $30 -- be used to fund schools or road repairs.
Moyle fired back, pointing out the Legislature added more than $100 million to the schools budget last year, and will likely do so again this year. He said the Legislature can find a middle ground on spending and tax cuts.
“There’s room to do both,” Moyle said.
House Minority Leader Mat Erpelding, D-Boise, criticized the plan.
“I’m a little bit disappointed in where we’ve placed our priorities first,” he told his colleagues.
Instead of tax-rate reduction for relief, Erpelding suggested lawmakers examine a targeted earned income tax credit, something he’s pushing for in a separate bill.
“We should make sure we give tax reduction to those who need it -- the middle class,” Erpelding said of his plan.
Rep. Robert Anderst, R-Nampa, spoke in favor of Moyle bill, telling the panel the Legislature has done something for everyone else in the past few years, but not Idaho taxpayers.
Moyle’s tax plan survived two additional motions. Rep. Mark Nye, D-Pocatello, motioned to send the bill to General Orders, where legislators could add a five-year sunset clause, and Rudolph moved to send the bill to the House without recommendation. He said he wanted more data on the economics behind the plan before giving it an affirmative vote.
The panel killed those two motions before sending the bill to the floor with a favorable recommendation. The full House will likely hear the plan within the next week.
The Associated Taxpayers of Idaho noted the income tax cut would affect rates for 331,000 Idaho filers, or about 76 percent of residents who file each year.
