When President Reagan signed the landmark TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Reform Act of 1986 into law, he cited the need to secure Americans’ economic freedoms. He cited the need to “restore certainty to our tax code and our economy.” And he cited the fact that – as he put it – “ultimately the economy is not made up of aggregates like government spending and consumer demand, but of individual men and women, each striving to provide for his family and better his or her lot in life.”
With that in mind, I encourage you to seriously consider legislation being introduced by Representative Marv Hagedorn. His bill would equalize and then gradually reduce our marginal State income tax rates for individuals and businesses over ten years, starting in 2013. But whether it’s that bill or an alternative, we need a long-term plan for reducing the tax burden on our citizens. That will go a long way toward providing a competitive advantage for Idahoans, stimulating economic growth and expanding our tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. .
The Idaho Reporter explains the Hagedorn bill:
Hagedorn’s bill is a 10-year plan that would lower personal and corporate income taxes in the state to a flat 4.9 percent, making it one of the lowest rates in the United States.[…]
The 10-year slide in rates can be stopped if the economy is slumping and the governor orders a reduction in spending or asks the Idaho State Tax Commission to delay implementation of the rate decrease. “There are triggers to protect the state’s general fund,” said Hagedorn.
Idaho’s individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. is currently 8 brackets ranging from 1.6% to 7.8%, and its corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. is a flat 7.6%.Share