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Proposal to cut income tax well received – mostly (access required)

Uniform World owner Rex Burmester says a proposal to reduce Idaho income tax rates would help his small shop in Nampa but would not have a huge impact. "I'm not looking to pay any more taxes than the next guy, but that's down on my priority list," he said. "Where we feel it is health care ...

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  5. I read this morning in the new Idaho Statesman Business Insider section where Utah is providing tax credits based on the number of new jobs and the employee salary rates for those jobs. Two variables that makes sense for granting a tax credit. Why give business a blanket tax cut if they don’t pony up to creation of quality jobs. Idaho’s approach is a handout to businesses with no accountablity on how the give-away will be used or whether there will be a payback to offset the loss of State revenue.

    Any tax cut or credit should also have the ability to turn the dial back the other way. That is, if a company enjoys the additional money in their pockets as a reward for moving to Idaho or creating additional jobs, then they shoud also be pentalized, i.e., tax increase, when they outsource or relocate jobs outside Idaho. This would stop the practice of business making job creation promises one day, receive their tax cut/credit, and then 6 to 12 months later move jobs out of state or overseas (example: 2005 High Technology Tax Credits pushed by Micron/Albertsons/HP).

    The current tax cut plan by the Govenor and Rep. Hagedorn is a “hold your breath and hope it works tactic”. There’s no indication from either individual on what plan B would be if the cuts don’t produce the expected results, nor is the any statement of how to cover the revenue short fall between when the cuts are enacted and when the business/job creation materialize – if in fact they do actually materialize.

    Perhaps another tactic is to have the Governor and Rep. Hagedorn recommend to Idaho businesses that they reduce their prices by 35% (revenue), customers will clammor to purchase their products (demand), and tax revenue would be up. I suspect that no business out there can affort to reduce their price by 35% and still make a profit. So why does the state believe it can do the same and still have a surviving budget?

  6. None of this will help Idaho; things are too far gone for that. The latest news is the state is still No. 1 for home price declines nationally, reflecting both the extent of the “fake it until you make it” family lending bubble, AND the increasingly precarious urban technology employment situation. At some point HP, Micron & others, after (yet again) cycling thru the Treasure Valley’s tech-dregs, will see a constrained labor market.

    As other states recover, trying to attract qualified people here will be a very tough sell. Why move to a cold, remote place where the cities can’t do zippo because there’s no home-rule, with America’s 9th highest income tax rates, 49th lowest public education expenditures, a politically determined strategy of wage, geography, and cultural isolationism, a Palinesque political mindset, etc, etc?

    Wait until they leave to cut taxes, doing so now will just make things terribly worse.

  7. To make a full and fair evaluation of how Idaho compares to our neighboring states this article and the Govenor needs to include the sales tax rates, vehicle/professional licensing fees, service/use fees and county/municipal tax rates of those states, i.e., a full per corporate and per individual tax burden evaluation. To support a specific budget level the money has to come from somewhere. If the revenue is not coming from corporate and individual taxes then where will it come from?

    Tax cuts are immediate, as soon as they are enacted. Revenue from capital improvement, relocation of businesses, or new hiring is a much slower process and timeline, if they happen at all or at the rate they are anticipated. How does the Govenor and Rep. Hagedorn propose the state cover the revenue short fall while these assumed new businesses relocate, and at the same time the tax cuts are immediately affecting revenue?

    Additionaly, the impact of new businesses relocating to Idaho may also require new infrastructure, government services, and of course my favorite, negotiated tax exemptions (Micron/Albertsons/HP a past favorite example). Again these considerations will have an immediate impact on the State’s budget.

    Not one of the companies interviewed indicated difinitively that they would hire additional employees as a result of tax cuts and thereby decrease the states unemployment rate. There should never be an expection that this proposed tax cut will provide significant help with new hiring among existing businesses. It would take approximate $3,500 per month in tax savings to cover the poverty level wage of one, family of four employee – is that realistic? And there is no guarantee the business wouldn’t decide to just pocket the windfall.