Saturday, January 16, 2010

Tax Policy

Yesterday, Dan Popkey wrote, with incredulity, about Republican legislators working towards tax cuts in this time of economic woe. The woe he referred to was the woe of the State with declining revenues rather than the woe of the taxpayers with declining revenues.

I'm not going to weigh in on the good or the bad here, but I am going to relate some facts.

We have for years been treated to the adage that Idaho has a "three legged stool" that gives us a balanced revenue collection at the state and local levels and this "three-legged stool" gives us balance, stability and low taxes overall. (The three legs are property tax, income tax and sales tax.) This stool may have delivered on the promises at one time, but it's now just a rickety piece of furniture.

Of the states surrounding us, Idaho has the highest state and local tax burden - all figures are 2008 and you think it got better in 2009? We are the 13th highest taxing state in the nation. Idaho's per capita income is 82.5% of the national average. Idaho has ranked lower than 18th and that was in 2006. Seems we've been a high tax state forever, we've just been told otherwise.

How are the states around us doing?

Washington with no income tax ranks 35th.
Oregon with no sales tax ranks 26th.
Wyoming with no income tax ranks 48th.
Montana with no sales tax ranks 40th.
Nevada with no income tax ranks 49th.
Utah, a three legged stool state, ranks 22nd.

Utah's per capita income is lower than Idaho's while Montana's is slightly higher. Washington, Oregon, Wyoming and Nevada's incomes are substantially higher.

Clearly, Idaho's tax burden is extremely high which does put us at a competitive disadvantage to our neighbors. Even Massachusetts, long thought to be a highly taxed state, has a state/local tax burden of 23. Massachusetts is less taxing than Idaho!!!!

As a taxpayer, I just hope the answer to high taxes isn't to raise them higher.


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