After about an hour’s worth of testimony for and against, a House committee on Tuesday voted along party lines, with just the panel’s two Democratic members objecting, to pass HB 436, the big new income-tax cut and rebate bill, and send it to the full House for a vote.
If approved, it would become the largest tax cut in state history at $600 million, surpassing last year’s similar tax-cut legislation. The bill includes $350 million in one-time rebates and $251 million in ongoing income tax rate reductions for individuals and corporations.
Rep. Mike Moyle, R-Star, responding to concerns raised in the hearing that Idaho needs property tax relief more than it needs another income tax cut, said, “Now, is there property tax relief we can provide? Absolutely. I have several bills,” including one that’s bipartisan, he said. “This is about income tax. This is where the money came from, this is where the money should go back.”
Rep. Lauren Necochea, D-Boise, countered, “This is not the priority of Idahoans, and it is just too lopsided. The money we’re working with here does not just come from income tax, in fact a big chunk of it comes from online sales tax, and everybody pays that.”
The measure would consolidate Idaho's current five income tax brackets to four and lower rates for three of them, with the top rate dropping from 6.5% to 6%; the corporate income tax rate also would drop from 6.5% to 6%. The bottom bracket wouldn't change, staying at 1%.
The bill would partially offset the cost of the ongoing cuts to the state treasury by permanently tapping $94 million a year from the Tax Relief Fund, a state fund that now collects all sales taxes paid on online purchases, rather than sending those taxes through the same distribution formula to local governments and the state general fund as other sales taxes.
Though even numbers of people signed up to testify for and against the bill — seven each — panel Co-Chair Jim Addis, R-Coeur d’Alene, called on all seven in favor to speak during the hearing, and just three against. The three who spoke against the bill, all citizens, all testified remotely, one from Moscow, one from Post Falls and one from Boise.
"This is incredibly regressive and unfair," said Kathy Dawes of Moscow. "The Idahoans who are paying the highest percent in total taxes are those in the lowest income bracket.”
She said, “The state’s current budget surplus is largely the result of persistently underfunding education since the 1990s.”
Among those speaking in favor of the bill were business groups both large and small, the Idaho Freedom Foundation, and two aides to Gov. Brad Little, who thanked lawmakers for working with him through the fall on the proposal.
You can read our full story here at idahopress.com (subscription required), or pick up Wednesday's Idaho Press.