A bill that would pare Idaho’s corporate and top personal income tax rates sailed through a House committee on a party-line vote Tuesday, but not without a few sparks.
Rep. Mat Erpelding, D-Boise, one of two Democrats who voted against the measure, said the drive for tax cuts ignored the state’s need to invest more in other areas, especially transportation. A funding program that diverts a portion of state surplus to road and bridge repair is set to expire this year.
Erpelding said the tax cut plan was not responsible.
“It seems particularly short-sighted,” Erpelding said. “The reality is there’s a right time for everything, and I don't think this is the right time.”
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His comments brought an angry retort from Rep. Mike Moyle, R-Star, the House majority leader and bill sponsor, who noted that Democrats hold just 11 out of 70 seats in the House.
“You probably stayed up all night thinking of that comment. It was very impressive,” Moyle told Erpelding. “But I would remind you there’s 11 Democrats because this state is conservative, and I take offense when people say that we aren’t conservative.”
The bill would cut the corporate income tax rate and the top personal income tax rate to 7.2 percent from 7.4 percent. It would exempt the first $750 of all income from tax. The estimated impact on revenue is $51 million, although an outside progressive tax policy group estimates the impact at $56 million.
Advocates say that the state income tax rate is higher than surrounding states and discourages businesses from relocating or opening in Idaho. Representatives of the Idaho Chamber Alliance and the Associated Taxpayers of Idaho spoke in favor of the cuts, citing the economic stimulus they could provide. Opponents from the Idaho Public Employees Association and the Idaho League of Women Voters spoke against it, with one telling the committee that state tax cuts result in tax shifts as localities pursue local tax levies to make up shortfalls.
Rep. John Gannon, D-Boise, who voted against the measure, cited findings of the state tax commission that found Idaho’s overall tax burden is the lowest among 11 Western states both per capita and relative to income.
The bill now moves to the full House.