Governor, lawmakers at odds on tax cuts

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If Senate President Pro Tem Brent Hill of Rexburg were in the U.S. Senate, he probably would have voted for the controversial Republican-charged tax reform bill that was signed by President Trump.

As a retired certified public accountant, Hill can analyze tax bills without the help of political talking points -- that the bill favors corporations and wealthy people while doing little to help the middle class.

“If you are going to cut taxes across the board, the high-income people are going to realize more gain than low-income people. That’s always going to be the case,” he said. “At the same time, the corporations are a big part of job creation. I’m not a complete trickle-down theorist; I think it has its limitations. But I do believe if you are going to have tax relief, then it ought to be across the board.”

Hill’s immediate concern is how the federal tax cuts will impact state revenue, and the early indications are that it will add almost $100 million to the state coffers, according to an analysis from the Idaho Tax Commission. Hill grilled the commissioners on their analysis, asking some questions that only a professional accountant can understand, and says the findings are on solid ground. Hill thinks the positive revenue picture leaves room for some tax cuts during this session.

“The Legislature has made it clear that it wants tax reductions,” he said.

House Assistant Majority Leader Brent Crane of Nampa would like to see the momentum for tax cuts continue in Idaho – starting with repeal of the sales tax on groceries, which would about offset the revenue increase Idaho would gain from the federal tax changes. The Legislature last year approved repealing the tax, over the wishes of Hill and House Speaker Scott Bedke of Oakley. That action was vetoed by Otter, who recently repeated his opposition to the grocery-tax repeal. He made no mention of the grocery-tax repeal in his State of the State message.

“That was a disappointment. Repealing the sales tax on groceries is something that would help everybody,” Crane said. “If we don’t address that in the 2018 session, then I think we have failed. It would be due to a lack of leadership at that point – whether that leadership is on the House side, the Senate side or the second floor (the governor’s office). That is something that Idahoans are asking for.”

Crane also would like fellow lawmakers to consider lowering the state’s individual and corporate tax rates, as Congress did. Otter said he was friendly toward that idea, if it could help stimulate economic growth. But other conditions include “keeping our fiscal house in order and our investments for the future on track. I will be proposing a plan to enable Idaho’s substantial conformance with the new federal tax code without putting our state revenues for Idaho taxpayers at risk.”

In other words, don’t expect any massive tax-cutting proposals coming from the governor’s office – at least not to the level that conservatives want. But Crane says the Legislature might have other ideas, possibly in the area of corporate tax rates.

“You have to understand that businesses do not pay taxes. Businesses pass on that tax rate as a part of doing business,” Crane said. “A lot of folks on the Democratic side of the aisle are not small business owners, so they don’t understand it. A lot of them work for a bureaucracy or a government agency and they’ve never had to make those business decisions that every small business owner faces.”

The best bet for tax cuts this year is for the Legislature to take another shot at repealing the grocery sales tax. I doubt if the governor will sign it, but lawmakers will have plenty of time to vote on a veto override if it’s done early enough.

Hill says he supports the repeal in principle, which gives a boost to proponents. Hill’s big objection last year was that the issue came in the final days of the legislative session “with no public input, no public hearings and no fiscal impact. You don’t do something significant like that in the waning days of the session.” If the process is more thorough this time, he said, “I may very well be on board with it.”

So, stay tuned. We should be hearing plenty about the grocery tax during the early part of this session.

Chuck Malloy, a long-time Idaho journalist, is a columnist with Idaho Politics Weekly. He may be reached at ctmalloy@outlook.com

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