Idaho has a serious problem with its tax system. The state’s income taxes are the highest in the Intermountain Region, with a top marginal income tax rate of 7.4 percent. It’s a deterrent to people wanting to move here and to people wanting to stay. State officials have worked for the last 15 years to bring the rate down from the nosebleed top rate of 8.2 percent to where it is today. At the start of the 2015 legislative session, Gov. Butch Otter unambitiously suggested clipping the current top rate by a tenth of a percent every year for four years, but he never introduced legislation to do it. A proposal to eliminate the sales tax on groceries and get the top rate to 6.5 percent right away passed the House but was denied a vote in the Senate.
Getting the top income tax rate dramatically lower is an important step in securing the state’s economic vitality. The high tax rate impacts everyone, rich and poor. As I’ve previously noted, some state officials, including Department of Commerce Director Jeff Sayer contend Idaho’s confiscatory tax rates aren’t a detriment to bringing new business here and that throwing money into “workforce development” programs is more important. Yet to lure new business, the state offers select, often politically-connected companies tax incentives intended to chop up to 30 percent off the “lucky” company’s tax liability. Other aspects of state tax law provide incentives for certain marketplace activities, such as the investment in equipment. The tax code also includes progressive income tax brackets that calls for the very poor to pay the least. All of these special gimmicks help drive up the top rate skyward making Idaho appear unattractive. Unwinding all the special interest breaks to get an income tax rate that is super low and fair to everyone is important work.
The rewriting of the income tax code is also a topic that deserves absolute transparency and openness. Lewiston Tribune editorial writer Marty Trillhaase noted Friday that’s not what Idahoans are getting from this state Legislature. A group of Idaho lawmakers has been meeting in secret to work through the logistics of what it would take to fix Idaho’s broken tax code. The group includes the chairmen of the House and Senate tax committees as well lawmakers from throughout Idaho, both Republican and Democrat. The non-partisan Legislative Services Office staff is facilitating the meetings, which have also been attended by officials from the governor’s office and the state Department of Commerce.
I’m told that the meetings weren’t necessarily “secret” as a notice of last month’s gathering was supposedly posted at the Statehouse. But beyond that, legislative leadership certainly didn’t go out of their way to tell everyone about it. There are ten legislative committees at work during this break between legislative sessions. Their meetings are all noted on the Internet. People on the outskirts of Idaho can listen to any meeting over the Internet. Not listed anywhere is the super secret committee dealing with the income tax. Consequently, many people, including uninvited lawmakers and groups interested in the formation of tax policy, complain they were unaware of the income tax discussion taking place in Boise. Whether the meetings violated the state’s Open Meeting Law is a standing question. At minimum, however, they’ve violated the spirit of the law, which says that the formation of public policy should take place in public.
This work is desperately needed, but even more so, it needs to occur outside the cover of darkness and secrecy. The next meeting is set for early October, and legislative leaders should be challenged to make certain that meeting notices are plentiful, posted on the Internet and that all sessions are available to be heard online. Anything less will be a disservice to Idahoans who deserve and demand nothing less than a transparent, open government.
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