Labrador says that as governor, he would slash Idaho’s taxes

U.S. Rep. Raul Labrador, a candidate for Idaho governor, talks during a town hall held at Meridian Middle School on April 19, 2017.
U.S. Rep. Raul Labrador, a candidate for Idaho governor, talks during a town hall held at Meridian Middle School on April 19, 2017. Idaho Statesman file

If elected governor of Idaho, U.S. Rep. Raul Labrador would pursue cutting the state’s sales, individual and corporate tax rates to 5 percent each.

The cuts are a key part of the GOP candidate’s economic plan, which he released highlights of Thursday.

“Idaho has some of the highest income tax rates in the West, hurting small businesses and families,” Labrador said in a news release. “Making this even worse, our tax code is riddled with loopholes that favor some industries over others, creating an uneven playing field and distorting the free market.”

Idaho’s tax rates currently sit at 6 percent for sales tax, 7.4 percent for corporate and up to 7.4 percent (based on income bracket) for individual income, according to the Idaho Tax Commission.

Among Idaho’s neighbors, Washington, Nevada and Wyoming do not levy an individual income tax. Utah’s rate is 5 percent, Montana’s 6.9 percent and Oregon’s 9.9 percent, according to a 2017 Tax Foundation analysis.

Idaho’s sales tax is the third-lowest in the West among states that have one, including Alaska. (Oregon and Montana don’t.) Idaho’s corporate tax rate is the fourth-highest in the West, again among states that have such a tax. Washington, Nevada and Wyoming either don’t have corporate taxes or use a different structure.

Labrador is one of several Republican contenders for governor in the May 15 primary. His most prominent competitors are Lt. Gov. Brad Little and Boise businessman Tommy Ahlquist.

Both Little and Ahlquist have also shared some plans regarding taxes and the economy. Little has said he would cut the income tax by $350 million, eliminate the grocery tax, link all new tax exemptions to a proportional reduction in state spending, cut unemployment taxes and increase the personal property tax exemption to $250,000. Ahlquist plans to cut $100 million of “wasteful spending” in his first 100 days and reform Idaho’s tax code to make it more “fair, flat and simple for Idaho families and businesses.”

In addition to his “5-5-5 tax plan,” Labrador wants to eliminate the sales tax on groceries and phase out the personal property tax on businesses. Both issues have come up before the Legislature in recent years. Lawmakers voted in 2017 to repeal the grocery tax, but Gov. Butch Otter blocked that change in a veto that triggered a court case.

“Charging sales taxes on food hurts families living on tight budgets, and it’s one of the most regressive and least fair forms of taxation. In fact, most states don’t tax food purchases at all,” Labrador said.

The personal property tax charged on business equipment “is one of the most unwieldy and least efficient forms of taxation,” he said. “This type of tax forces small businesses to spend countless hours each year inventorying equipment, and it discourages larger businesses from investing in Idaho. This tax must go.”

Labrador presented Thursday’s plan as “the first plank of his conservative vision for a stronger Idaho.” Other highlights:

▪  Reduce or end economic development “favoritism” by putting a moratorium on new urban renewal districts, tightening urban renewal laws and ending “tax giveaways” such as incentives for certain new or expanding businesses.

“I oppose economic policies that pick winners and losers, and I do not believe in increasing taxes and lining the pockets of private businesses and developers with public subsidies,” he said.

▪  Reduce government spending and growth.

“In my first year in office, all agency heads will be directed to submit budgets that start out with a 5 percent base spending reduction or explain why they can’t,” he said. “... Agency directors must understand that no longer will state spending grow faster than the economy and faster than the growth in the average family’s income.”

▪  Eliminate any “occupational licenses that protect special interests, not the public.” He said he would work with the Legislature to identify specific licenses.

▪  Review Idaho’s administrative code and eliminate regulations that are “duplicative, redundant, harmful to free enterprise, outdated, or unnecessary.”

▪  Create a Governor’s Office of Innovation and Economic Competitiveness to work with entrepreneurs, educational institutions, industry partners, state agencies and regional economic development organizations to strengthen Idaho’s economy. Modernize the Department of Commerce to support these activities and overhaul the state’s 20-year-old Workforce Development Training Fund to benefit individual workers, not “select companies or businesses.”

Finally, Labrador said, “As governor, I will take steps to reduce the state’s reliance on the federal government so that our residents who depend on government services are not left vulnerable by actions taken by Congress.”

Cynthia Sewell: 208-377-6428, @CynthiaSewell