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Sometimes the tax debate isn’t just on how high taxes are, but who is paying the tax.

Hard-working citizens pay taxes to support vital services provided by local, state and federal governments like schools, fire protection, EMS, police, roads, bridges, water, and sewer to name a few. Tax debates largely focus on if taxes are excessive or not. According to the Idaho State Tax Commission, five of seven state returns filed are for refunds. Last year 58,867 individual income tax refunds equaled $329,534,197.

So how does Idaho compare to the rest of the nation when considering total tax burden? 2014 information compiled by the U.S. Bureau of Census in their Government Finance Report (released in 2017) ranks Idaho compared with all 50 states and the District of Columbia. The higher the ranking number the lower the tax. Here’s how Idaho ranks:

  • 36th in property tax per $1,000 of income (per capita we rank 41st)
  • 25th in sales tax per $1,000 of income (per capita we rank 36th)
  • 30th in individual income per $1,000 of income (per capita we rank 34th)
  • 25th in corporate tax per $1,000 of income (per capita we rank 29th)
  • 9th in fuel tax per $1,000 of Income (per capita we rank 19th)
  • 41st overall in state and local tax burden

Idaho’s per capita rank for state and local tax burden is 48th, which means that income remaining after state and local taxes equals 90.99%. That ranks Idaho 11th for overall tax burden, with the No. 1 rank going to the state with the most percent of income remaining. Idaho’s tax burden ranks from 6th to 11th best in the nation over the past six years.

It’s important to consider the effective tax rate when determining if our taxes are too high. A recent article by Betsy Russell of the Spokesman Review explains it best: “Tax rates alone don’t tell you how much people are paying. In Idaho, where the top personal income tax rate is 7.4 percent, taxpayers are actually paying less in state income tax than in Utah where the top rate is 5 percent. That’s because the two states’ income taxes are structured differently, both in how they define taxable income and in their deductions and exemptions.”

Every year, the Idaho House Revenue and Taxation Committee — on which I serve — considers the dozens of sales tax and property tax exemptions in the tax code and who qualifies for them. Should services such as haircuts, attorney’s fees, tax preparation fees, etc., be taxed or remain exempt? How about medicines and doctor visits? If all sales tax exemptions were eliminated could we lower the rate to 2, 3 or 4 percent, lowering the burden by broadening the base? For interesting reading look up Idaho Code 63-601 regarding property tax exemptions, or for sales tax exemptions refer to or Idaho Code 63-3622 A to UU.

As a member of this committee, I will be involved in tax policy discussion and possible legislation to lower corporate and individual income tax rates when appropriate while assuring essential services are properly funded. I have sponsored and carried legislation requesting various tax exemptions for organizations that I thought were deserving, such as The Wellness Tree, Volunteers Against Violence and Rising Stars Therapeutic Riding Center. I will continue to pursue these exemptions if the tax code remains as it is.

I look forward to hearing your thoughts to keep the discussion going.

Clark Kauffman of Filer represents District 25 in the Idaho House of Representatives.


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