Capitol & State

Advocates from all quarters weigh in on tax policy

Statistics on 2014 GDP growth by state from the U.S. Bureau of Economic Analysis
Statistics on 2014 GDP growth by state from the U.S. Bureau of Economic Analysis

The Idaho Legislature’s working group on tax policy heard a free market advocate Tuesday call for tax cuts and decry “special interest” tax incentives, while on the other side, a tax fairness advocate praised a somewhat-flawed-but-mostly-fair existing tax system and urged more investment in education to boost wages.

Mixed in amid the two were accountants, taxpayers advocates, and lobbyists for retailers and small businesses all weighing in on potential changes to tax policy that lawmakers should consider. The ad hoc panel is charged with making long and short-term policy recommendations to the full Legislature, with some recommendations potentially presented for action in the coming session.

Wayne Hoffman, president of the Idaho Freedom Foundation, which favors freer markets and lower taxes, cited North Carolina’s cuts to individual and corporate taxes, which he said have put that state’s economy in “high gear.”

Later, Lauren Necochea, director of the Idaho Center for Fiscal Policy, which advocates for progressive tax policy, said four other states that similarly cut taxes in recent years – Kansas, Wisconsin, Maine and Ohio – have seen slower than average growth.

A quick look at June data from the U.S. Bureau of Economic Analysis put overall U.S. GDP growth in 2014 at 2.2 percent. Idaho’s growth was measured at 2.7 percent, which ranked it 12th among states. In the five where taxes were cut, the range went from a low of 0.2 percent growth in Maine to 2.1 percent in Ohio. North Carolina’s GDP growth was 1.4 percent, or 25th among states.

Hoffman advocated for eliminating both the grocery tax credit and the sales tax on groceries, as well as tax incentives to lure new business to the state, which he said are unfair to existing businesses.

“Nothing gives me more of a headache than to listen to a bunch of elected officials sitting around a table trying to discern what will help the economy or not help the economy,” Hoffman said. “That somehow you’re going to a wave a magic wand and make the economy dance to your tune? It doesn’t work.”

Necochea presented numerous data tables that showed Idaho’s tax structure is fairer than most surrounding states, but also pointed to education funding trends that have put Idaho in the bottom-tenth or lower in terms of academic achievement, wages and business attractiveness.