Study: Idahoans pay big tax burden

Idaho has one of the lowest per-capita income rates in the country.

But a new study found that Idaho residents have the 13th largest state tax burden in the nation, ranking just one-tenth of a percent behind Pennsylvania — a state whose residents earn an average of $7,300 more per year than Idahoans.

On average, Idaho residents paid 10.1 percent of their annual income to state and local taxes in 2008 — four-tenths of a percent higher than the U.S. average.

“The real issue here are the local taxes,” said Post Fall resident Tom Macy. “The Idaho state Constitution says that taxpayers should be consulted, but where was the consultation when they built the new City Hall in Post Falls? Our local leaders consider taxpayers an impediment to progress.”

The Tax Foundation report calculates state tax burden statistics by dividing the total amount state residents pay in taxes by the total income in each state.

With an average per-capita income of $36,500 a year, Idaho ranks 42nd nationally in earnings.

The study found that the average Idahoan paid $3,700 in state and local taxes this year.

Rep. Bob Nonini, R-Coeur d’Alene, said Idaho’s high personal income tax, combined with the inefficiency of government, is to blame for Idaho’s large tax burden.

“Taxes are just too high,” Nonini said. “Government doesn’t know how to spend people’s tax dollars efficiently. That’s always been the problem on the local, state and federal scale. They’re wasteful spenders and they don’t deserve to have more of our tax dollars.

“I’m a strong believer in Reaganomics. I think we should cut taxes in Idaho.”

State tax burdens fell slightly in 2008 from 2007 as income growth outpaced tax growth. Idaho’s tax burden has remained consistent over the last 30 years, hovering around 10 percent.

Most of Idaho’s tax revenue is generated from income tax, property tax and sales tax. Property taxes, however, are collected by counties and taxing districts and do not generate revenue for state use.

In the fiscal year 2007, the state of Idaho collected $3.4 billion in taxes, nearly half of which came from individual income taxes.

New Jersey has the nation’s highest state tax burden, at 11.8 percent, while Alaska’s 6.4 percent lands it at the bottom of the list.

States like Wyoming and Alaska enjoy two of the lowest tax burden rates in the nation because of significant out-of-state tax revenues from oil and coal sales.

Macy said North Idaho is often overlooked when state tax revenue is re-invested.

“People aren’t getting anything for their tax dollars in this area,” he said.