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On Idaho's Tax Burden


Tax burden, the amount of income spent on taxes by some accountings, is in the eye of the beholder. A recent plan, floated by the Republican leadership in the Idaho House of Representatives, calls for lowering some personal and corporate income taxes to better compete with neighboring states.

As House Majority Leader Mike Moyle tells BW's Andrew Crisp this week (See story this page): "We were the 13th highest tax burden in the nation last year. Thirteenth highest."

Moyle's assertion flies in the face of a recent analysis by the Idaho State Tax Commission that ranks Idaho 42nd nationally and ninth among the 11 Western states when taxes are taken as a proportion of income. If you just count the per capita tax burden in Idaho, the state ranks 46th nationally and last among the Western states.

So what is Moyle talking about?

The study he cites is from the (tax-exempt) Tax Foundation, a nonpartisan Washington, D.C., research group that generally feels taxation is unfair and excessive. The Tax Foundation ranked Idaho 13 for tax burden last year, just behind Minnesota and above Arkansas.

But the group uses a different formula to calculate its rankings. It counts tax burdens paid by Idaho residents in other states toward Idahoans' burden and strips out taxes paid to Idaho by residents of other states.

The Tax Commission only counts taxes paid to Idaho in its calculations. Both rely on Census data for their calculations, though other nonpartisan, more tax-philic groups like the Center on Budget and Policy Priorities have criticized the Tax Foundation's methodology.

The Tax Foundation report shows that Idahoans import a large chunk of their tax burden. For every $2,374 per capita paid to Idaho tax collectors, Idaho residents spend another $1,296 in tax dollars in other states.

The Tax Commission study reflects Idaho's own tax structure more accurately. And it does make some points that help Moyle's argument. While Idaho ranks about the middle in individual and toward the bottom (35th) in corporate income taxes across the country, its individual income taxes are 8 percent above the median for Western states and corporate is on par with neighboring states.

So Moyle, along with Reps. Raul Labrador and Marv Hagedorn, hope to lower those two tax categories starting in 2012.

Idaho significantly lowered property taxes in 2007, shifting school funding to other tax categories. But the Tax Commission reports that Idaho's tax burden remains basically balanced on what lawmakers like to call the three-legged stool of property, sales and income tax.

On top of that three-legged stool is the state budget, which pays for schools, police, roads and everything else state government does.

Which leg gets kicked out depends on which report you choose to believe.