Printed on: November 21, 2012
Prepare to pay more
Cutting taxes for the middle class helps the economy. People struggling to pay the bills use their savings to purchase items they could not otherwise afford. Everybody wins.
Reducing tax rates for those whose pockets are full does nothing for the economy. A recent Congressional Research Service report looked at tax rates since 1945. Its conclusion should be a lesson for policymakers: "The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie."
And yet, over and over, the Idaho Republican legislative supermajority has ignored the truism laid out by the CRS report. In 2001, GOP lawmakers reduced income taxes on individuals and corporations by 5 percent. Five years later, the GOP cut property taxes by $260 million -- a windfall for wealthy landowners and big business -- while raising the sales tax 20 percent, which increased the burden on the working poor. Last year, lawmakers cut income taxes for top earners, a $35 million annual gift that will keep on giving. And now, despite 10 years of evidence that the wealth is not trickling down, the GOP is preparing to repeat its mistakes.
Pushed by the big-business lobby and supported by Gov. C.L. "Butch" Otter, lawmakers are poised to eliminate the personal property tax that corporations pay on equipment. That financial hit -- estimated in the $135 million range -- would gut city and county budgets. Because local government has mandated services to provide, those costs will be passed to homeowners and small businesses.
Elections matter. Idahoans chose a Legislature dominated by Republicans eager to cut taxes. We get that. What is difficult to understand is why the GOP refuses to consider tax cuts that would help the economy and working poor. Not long ago, it stood poised to do just that. As he was preparing to leave office in 2006, then-Gov. James Risch called upon the Legislature to phase out the sales tax on groceries. Doing so would have saved a family of four $400 annually.
Idaho is one of six states that fully tax bread and meat. Utah's food tax is far less than its rate for other purchases. Wyoming levies no tax on sustenance. Neither do Washington, Montana, Oregon, Nevada, California, Colorado, Arizona or New Mexico.
The question is this: Will our Legislature, for once, put the interests of everyday Idahoans ahead of the goodies requested by the big-business lobby?
We'll have our answer soon enough. If the last decade is any indication, prepare to be disappointed. Then, when the corporations get their equipment tax break, prepare to pay more.