BOISE -- House Majority Leader Mike Moyle is proposing a huge income tax cut.
The problem Idaho has, when businesses look at Idaho, our income and corporate taxes are too high, said Moyle.
Moyle says his bill would draw more businesses to the Gem State, but the tax cut would mean Idaho would lose out on millions in tax revenue, and some are already calling it a tax cut for the rich.
Idaho's income tax rate for corporations is 7.4 percent. That's higher than almost all other neighboring states, and Moyle says it's keeping businesses away, It's causing people, while they like Idaho, to not give us a second look.
The only neighboring state that has a higher income tax is Oregon, and most Oregon corporations don't even qualify for that. Also, there's no sales tax there. Three other neighboring states (Nevada, Washington and Wyoming) don't even have an income tax. That's what Idaho is up against, and why Moyle says Idaho needs to cut its income tax. That cut would be for corporations and all the tax brackets, by six-tenths of a percent over six years, starting in 2015.
His bill would eventually get Idaho's top rate for businesses and its highest earners to 6.8 percent. At the end of the six-year period it will put you below Montana. You'll still be higher than Wyoming. You'll still be higher than Washington. You'll still be higher than Nevada, and you'll still be higher than Utah. And, that's one of the problems we have. These surrounding states are substantially lower when it comes to the income tax rate, and for us to draw those businesses here we need to get that rate down where we're competitive.
The cut would mean Idaho would lose out on $21 million in tax revenue the first year, increasing by the same amount every year (resulting in $126 million annually at the end of the six years). But Moyle believes that loss will be covered, and then some, by the economic impact of more businesses coming into the state.
Critics argue this tax cut benefits the rich. Moyle points out that this would be a cut in every tax bracket. If you look at it overall, the lower-end income tax bracket in the state of Idaho, those that are in that bracket will have a bigger tax cut proportionally, than those on the high end. It's good for everybody.
So what kind of chance does the bill have of passing? Moyle says he's heard a lot of support for it. Some were concerned about funding education, which is why the cut wouldn't start until 2015. The debate on this bill really heats up next week when it goes before the tax committee.