Legislators say they'll change a tax bill before trying it again on the Senate floor, after the attorney general's office said it might leave Idaho on constitutionally shaky ground.
The bill, which would give up to 30 percent in tax incentives to job-creating businesses, cleared the Senate 29-6 Monday.
But that was before Deputy Attorney General Chelsea Kidney released an opinion that giving a seven-member board the final word on who gets tax breaks could result in unequal treatment of identical businesses.
Business leaders worried Idaho's tax rates are too high compared to its neighbors notched an initial victory when the House Revenue and Taxation Committee approved a bill aiming to make the state more competitive.
The Republican-led panel voted Thursday to back the Idaho Chamber Alliance's proposal to cut corporate and individual income tax rates by a percentage point annually over the next six years, for an eventual $125 million cost.
Once completed, it would leave Idaho's top tax rate at 6.8 percent, lower than Montana's 6.9 percent.
Idaho's lackluster quiver of tax incentives make it flyover country for many companies looking to relocate or expand.
That's the verdict of Department of Commerce Director Jeff Sayer, who pitched a plan Friday he says would change that.
Sayer's proposition: What if Idaho allows companies that hire new, well-paid employees to recoup up to 30 percent of their income, sales and payroll taxes after they've proven to have met their expansion promises?
That way, he says, the state would protect itself from companies that don't follow through.
House Speaker Scott Bedke says he's met with Idaho's former chief economist over a proposal to shift $80 million from a grocery tax credit to individual and corporate income tax cuts.
Bedke, a Republican from Oakley, met with Mike Ferguson, the top economist at the state under six governors before retiring four years ago.
Bedke's proposes to redirect money now given to Idaho families to offset sales tax they pay on groceries to income tax cuts, in hopes of making Idaho a more-attractive place for businesses to relocate.
Idaho's former chief economist says families of four earning more than $117,750 would see lower taxes, should lawmakers adopt House Speaker Scott Bedke's proposal to shift money from a grocery tax credit to individual and corporate income tax cuts.
Mike Ferguson, chief economist for six governors including Gov. C.L. "Butch" Otter, said Thursday families earning less would likely see a higher tax burden, according to his calculations.
Idaho's Superintendent of Public Instruction Tom Luna told lawmakers Wednesday they must consider collecting the sales tax on Internet purchases in order to fund improvements to the state's education system.
The new rules mean cell towers, underground storage tanks, poles and towers, signposts, pipelines and conduit, and railroad track are defined as real property, excluding the items from the personal property tax exemption.
Certain utility companies in Idaho won't see as large of a tax break as many anticipated now that the state has more clearly defined what types of property qualify for the business equipment tax exemption.
The Idaho Tax Commission Tuesday unanimously approved two rules that define the difference between real and personal property.
A ballot measure in the Sun Valley area is emblematic of the challenges facing small airports across the West. Residents of Hailey and Ketchum, Idaho decide Tuesday whether to raise city taxes to subsidize commercial airline service.
Voters in the neighboring Idaho resort towns are being asked to raise the lodging and rental car tax, and in the case of Ketchum add a 1 percent retail sales tax, although groceries and gas would be exempt from the higher tax.
A state lawmaker contends Idaho's tax collectors risk violating the U.S. Constitution by requiring same-sex couples who are legally married elsewhere to do extra work when filing state income taxes.
Boise Democratic Rep. John Gannon, a lawyer, says litigation in Ohio suggests Idaho's new rules requiring married gay couples to recalculate state taxes as singles after filing joint federal returns could be vulnerable.
Recently, an Ohio federal judge ordered the state to recognize a gay couple's marriage in New York despite Ohio's constitutional ban.
Idaho aims to require same-sex couples who are legally married elsewhere to recalculate their federal Internal Revenue Service filings before filing state taxes.
Tax Commission spokeswoman Liz Rodosovich said Thursday the agency altered its 2013 income tax forms following June's U.S. Supreme Court decision invalidating parts of the federal Defense of Marriage Act.
That prompted the IRS to rule legally married same-sex couples in states that recognize their marriages will be treated as married for federal tax purposes.