Income Tax Cut Bill Presented at Idaho House | national news
BOISE — Significant income tax cuts and rebates for high-net-worth individuals and corporations are promised under new legislation that was swiftly presented to the House Revenue & Taxation Committee on Wednesday morning, along with a rebate $75 minimum for each 2019 Idaho income tax filer.
Gov. Brad Little introduced the proposal in his state of the state address to a joint session of the Legislative Assembly on Monday, and the House committee moved with unusual speed to get it introduced on the third only day of this year’s legislative session. The bill was introduced in a voice vote in committee, with only Rep. Lauren Necochea, D-Boise, dissenting.
It would offer one-time refunds of either 12% of state income taxes paid in 2020 or $75, whichever is greater, to all Idahoans who have filed state income tax returns. state in 2019. It would also permanently reduce personal and corporate income tax rates in Idaho, adding $251 million annually in ongoing personal and corporate tax cuts going forward.
The approach is similar, but more significant, to the income tax cuts and record rebates that Idaho and Little lawmakers approved in 2021. Last year’s rebates set a minimum of $50 , so this year marks a 50% increase. However, according to Idaho State Tax Commission figures obtained by The Idaho Press, last year’s refunds went to 706,294 Idaho filers, and more than half – 365,295 – received only the minimum amount. This meant that a total of $38 million was distributed as rebates to low-income Idahoans, while high-income people received $204.7 million.
House and Senate Democrats have decried the proposal as broadly benefiting the wealthy.
“The proposed single tax refund increases with income level, so the higher the income, the more money they will receive,” the minority party said in a statement after the vote. “The ongoing revenue cuts are also directing the biggest benefits up the income ladder. A person with an annual taxable income of $1,000,000 will receive an ongoing annual tax reduction of $5,000 in addition to a one-time rebate of nearly $8,000. Idahoans with the lowest incomes will receive a $75 rebate.
Rep. Steven Harris, R-Meridian, the bill’s lead sponsor and House Taxation Chairman, said, “Someone pays income tax, we’re going to refund income tax.” He called it “fair, even obvious.”
Harris told the committee: ‘This is the tax relief bill of 2022. The bill does a few simple things, but will have a dramatic fiscal impact, both for our taxpayers but also for the government of the state.
The measure would consolidate Idaho’s current five tax brackets at four rates and lower for each, with the top rate dropping from 6.5% to 6%; the corporate tax rate would also drop from 6.5% to 6%.
The bill would partially offset the cost of ongoing treasury cuts by permanently drawing $94 million a year from the Tax Relief Fund, a state fund that now collects all sales taxes paid on purchases. online, rather than sending these taxes through the same distribution formula to local governments and the state’s general fund as other sales taxes.
Necochea said, “This is just not the tax relief Idahoans want.”
Rep. Tammy Nichols, R-Middleton, asked Harris, “Will this do anything for property tax relief? Or is it income tax only?
“It’s not a property tax bill, obviously,” Harris replied. He then called the bill “income and sales tax relief.” His logic was that low-income taxpayers who don’t pay much or any state income tax could use their $75 refund to offset the sales taxes they pay. “It becomes a sales tax refund,” he said. “However, you can do it as a property tax, or a dinner party, or a vacation, or however you want to make that part of it.”
He also mentioned the governor’s proposals for big investments next year in transportation and education, and noted that in 2020 Little appealed for federal coronavirus assistance from the CARES Act to compensate. and alleviating local property taxes for first responder costs in many Idaho communities. And Harris mentioned that local governments will receive direct payments from the federal American Rescue Plan Act relief bill, “with less stress than we’ve seen in 2020. So there’s a lot of tax pressure land which is suppressed in a number of areas,” he said. . “That’s not it, of course.”
Nichols replied: “So it was a yes or no question, thank you for that answer. It was no.
After the vote, Harris said a date had yet to be set for the full hearing on the bill, but he said, “Obviously we’ve been working on that over the course of the fall, the governor’s office, the Senate and the House. We intend to move him fairly quickly – he’s ready to go.
The main sponsors of the bill are Harris; House Majority Leader Mike Moyle, R-Star; Senate Fiscal Chairman Jim Rice, R-Caldwell; and Senator C. Scott Grow, R-Eagle.
The House Republican Caucus, in a statement immediately after the bill was introduced, called it “major tax relief” and Harris said, “This bill goes a long way towards utilizing our record budget surplus of the most responsible way possible: by allowing to work Families in Idaho must keep more of what they have earned.
House and Senate Democrats, in their statement on the new legislation, denounced its “enormous price tag.”
“This costly legislation will remove other opportunities such as reducing property taxes or repealing the food tax,” Necochea said. “Every major tax bill in Idaho for at least the past decade has prioritized profitable corporations and the wealthy. We have an opportunity this year to put Idaho workers first and strengthen our middle class.
Later Wednesday morning, the new bill was read from the House table and given the bill number HB 436.
To become law, the bill would need to be authorized by committee after a full hearing, passed by the full House, follow a similar process in the Senate, and be signed into law by the governor. It has a retroactive effective date of January 1, 2022.
Harris said: “So we’re now 12 days away with these impressive new rates.”