Speaker Bedke proposes $80 million tax shift

The Republican says lowering income rates could help Idaho pitch itself to businesses.

dpopkey@idahostatesman.comJanuary 22, 2014 

House Speaker Scott Bedke will introduce a bill to drop Idaho income taxes and pay for it by ending the $80-per-person grocery tax credit claimed by middle- and high-income Idahoans.

Bedke said he plans to introduce the measure as early as this week. He proposes continuing the $100 grocery credit for Idahoans with incomes below 138 percent of the federal poverty level and the $120 credit for those 65 and older.

He aims to drop top personal and corporate tax rates from 7.4 percent to 6.95 percent. The Oakley Republican said that will attract new business, boost the economy and spur Idaho’s transition from an agricultural to a high-tech economy.

“We are out of step with our neighboring states,” Bedke told about 100 people at a forum hosted by the Andrus Center for Public Policy at Boise State. “Every good retailer in the room knows that the difference between $19.95 and $20 is a lot more than a nickel. So if Idaho’s income tax rate had a six in front of it instead of a seven, would we not be marginally more competitive in this transition?”

Idaho’s rates, which were lowered by the 2012 Legislature, are higher than any of the six surrounding states, except in Oregon, which has no sales tax.

Some states don’t charge sales tax on food. In Idaho, policymakers use a per-head rebate to help offset the cost. In 2008, the Legislature boosted the grocery credit at the urging of Gov. Butch Otter. This year, Bedke said, the credit’s cost will rise to $133.5 million.

Preserving the credit for the poor and the elderly will benefit those who need it most, Bedke said, while giving Commerce Director Jeff Sayer a PR tool in recruiting new business. Bedke’s bill would free up $70 million to $80 million for rate reductions.

“When Jeff Sayer goes out, he’s not closed one deal with the words, ‘Yeah, but we’ve got this awesome grocery tax credit,’ ” Bedke said.

Bedke, a rancher, said he’s concerned about slumping wages, with Idaho ranking last in the country. Lowering tax rates can help “break out of the doldrums,” he said.

Idaho also ranks 50th in spending on K-12 education. Bedke said it’s “unacceptable” that students lag a year or a year-and-a-half behind students in better-funded states such as Massachusetts.

He called for better teacher pay, as recommended by Otter’s education task force and under review by lawmakers. But with details of a teacher career ladder yet to be worked out, Bedke said significant pay increases will have to wait another session.

Asked why the $80 million can’t simply be apportioned to schools, Bedke said the votes aren’t there in the Legislature.

“If we’re not going to put it into education, then let’s put it someplace that churns the economy,” he said.

“My approach is to try to grow the economy first,” Bedke said after his hour-long talk. “Some would say, ‘Is it a chicken and egg?’ I don’t know if my position represents the chicken or the egg, but it’s been my experience that the healthier the chicken — that is, the economy — the longer and better they lay.”

Before becoming speaker a year ago, Bedke was a member of the House Revenue & Taxation Committee. He said he’s spoken to Chairman Gary Collins, R-Nampa, and Senate Local Government & Taxation Committee Chairman Jeff Siddoway, R-Terreton, about his idea.

He’s also chatted with House Majority Leader Mike Moyle, R-Star, an influential member of the House panel who has long advocated dropping rates.

Moyle said he hasn’t seen enough detail to pass judgment. “I need to know more about it,” he said.

Dan Popkey: 377-6438, Twitter: @IDS_politics

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