December 3, 2008
"Idaho Unemployment Rises Again"
By Dan Popkey
Scott Hodge, president of the Tax Foundation, a conservative think tank in Washington, D.C., said Idaho's tax rates are not competitive and should be cut.
State and local taxes account for 10.1 percent of state income in Idaho, ranking 13th highest in the nation, Hodge said. Wyoming ranks 48th, Montana 40th, Washington 35th and Utah 22nd.
"You stand out in this high-tax state in the middle of a low-tax oasis," he said.
Hodge suggested eliminating the corporate income tax, which he said is the most anti-growth of all taxes.
"It's going to be really difficult for Idaho to gain a comparative advantage to any of your neighbors without eliminating one of your major taxes," he said. "Only permanent tax cuts will change people's behavior long term."
If ending the corporate income tax isn't possible, Hodge suggested cutting both personal and corporate rates. He acknowledged that may be tough in the current environment, but warned against raising taxes, citing the case of Maryland. In January, Maryland raised personal and corporate taxes, sales taxes and cigarette taxes to close a $1 billion deficit, only to see revenues come in 44 percent below projections. So, in November, voters approved state-run slot machines "in a desperate attempt to raise revenue from people who are bad at math, or the poor," Hodge said.