Tax Cuts Fall Flat in Idaho


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Tax cuts for corporations and wealthy individuals were on the table in Idaho this year, but lawmakers ultimately decided that adequately funding education is more important.  Governor Butch Otter started the year by trying to couple income and property tax cuts with an increase in education funding, but the legislature opted to drop the tax cuts entirely and double his education funding proposal.  Far from being upset at the development, Otter conceded that “I think that they found a better use for the money than tax relief this year.”

Idaho’s big business lobby reacted very differently, complaining that lawmakers didn’t “truly do what’s right for business.”  In their eyes, it’s more important to eliminate the property tax on large businesses’ equipment and machinery, despite the fact that the largest beneficiary of that plan (IDACorp) is already managing to avoid paying anything in state corporate income taxes.

The other major tax cut ideas under discussion were reducing the state’s corporate income tax rate, as well as its top personal income tax rate.  But in a report we issued last week, we showed that many companies are already paying very little in state corporate income tax thanks to “copious loopholes, lavish giveaways and crafty accounting.”  And when the Institute on Taxation and Economic Policy (ITEP) analyzed the impact of an earlier cut in the state’s top personal income tax rate, we found that most of the tax cuts flowed to the state’s top 1 percent of earners, and that the vast majority of Idahoans received no benefit.

Idahoans should feel relieved that none of these regressive ideas were enacted into law this year.

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