Brad Little wants to cut income taxes by $350 million if he’s elected governor.
This is perhaps the most eye-catching promise in Phase Two of Little’s “Idaho grown jobs plan,” which he released last week and which focuses on ways to cut taxes and government spending.
The other proposals in the plan include eliminating the sales tax on groceries, which is supported by all three of the major candidates for the Republican gubernatorial nomination and which passed the Legislature this year but was vetoed by Gov. C.L. “Butch” Otter; mandating that new tax exemptions be linked to an equal spending cut; and cutting the unemployment insurance tax, which would save employers more than $100 million over the next three years and which had wide support in the Legislature this year but didn’t pass because it was tied at the last minute to a bill containing a more controversial income tax cut. Little also wants to increase the personal property tax exemption from $100,000 to $250,000, and let counties go even further, even to removing it fully if they so desire.
Little released Phase 1, which was focused on health care policy, reducing regulations on businesses and proposals to keep young people in Idaho rather than leaving the state for jobs, a month ago. He is running for the GOP nomination against U.S. Rep. Raul Labrador and Treasure Valley developer and doctor Tommy Ahlquist. The primary is in May 2018. Otter is not seeking another term.
That $350 million in income tax cuts is a goal, and not one that would be met in one year — if it were that would be almost 17 percent of the combined $2.1 billion in individual and corporate income tax the state collected in 2016 according to the Tax Commission’s numbers.
“It depends upon the rate of growth in the state,” Little said in an interview with the Times-News editorial board Thursday, when asked how long it would take.
Little didn’t say exactly how he would want to restructure the state’s income tax brackets but did say he would get the top rate down to somewhere in the 6-percents, as opposed to the current 7.4 percent top rate.
Little said reducing income tax rates is especially important now given the talk at the federal level of getting rid of the deduction for state and local taxes. The components of his plan, Little said, are pieces that are generally agreed upon by many in the Legislature — many of them have come up, in various versions, in legislation proposed in recent sessions.
Little also said getting rid of the tax on groceries is a matter of keeping business in Idaho’s border communities rather than seeing people drive out of state to shop. All the states bordering Idaho either don’t have a sales tax on groceries (some because they don’t have a statewide sales tax, others because groceries are exempted) or tax them at a lower rate than the 6 percent Idaho collects on groceries and anything else that isn’t specifically exempted from sales tax.
“We’re not competitive because nobody else taxes groceries,” he said.
Little said an increased focus on collecting taxes on Internet sales, including the state’s deal earlier this year with Amazon to start collecting tax on its sales, could help make up for money lost from not taxing groceries.
Little was also skeptical about changing the law to let more cities and counties levy a local option sales tax; currently, that power is mostly limited to a handful of resort communities.
“A hodgepodge of different taxes creates problems and dislocation,” he said.
If it were to be expanded — and there hasn’t been much appetite lately in the Legislature to do so — Little said it would have to be regional in nature, rather than limited to one city that would get the benefits from taxing outsiders who come to shop.
“You want to be careful you’re not in a situation where the rich get richer and the poor get poorer,” he said.
Generally speaking, the idea of expanding local sales taxing authority has some support from officials and business leaders in regional hub cities such as Twin Falls, casting it as a matter of fairness since they have to pick up the increased tab for city services due to the large number of non-residents who come into their cities every day. Lawmakers who represent smaller communities tend to oppose it. Little said cities like Twin Falls already benefit from growth, such as collecting more in property taxes due to development.
“By being the commercial and the retail hub they’re getting that money right now,” he said.