The House Revenue and Taxation Committee introduced more than half a dozen new tax policy bills Monday, including two alternatives to the governor’s tax cut plan.
One of the alternatives, sponsored by Sen. Dan Johnson, R-Lewiston, would provide $95.9 million in net tax relief — about $9 million less than the governor’s proposal.
The second, sponsored by Reps. Vito Barbieri, R-Dalton Gardens and Patrick McDonald, R-Boise, would provide an estimated $264.7 million in tax relief, or $160 million more the governor’s plan.
However, the Barbieri-McDonald bill doesn’t address how to conform with the recent federal tax changes; if it did, the net cost would be lower, but still more than the governor’s.
The committee also introduced a third proposal that automatically cuts corporate and individual income tax rates by 0.1 percent whenever year-over-year revenue growth equals or exceeds 6 percent.
How many of these bills actually get a public hearing is up to Rep. Gary Collins, R-Nampa, the committee chairman. Details on all of the tax bills introduced Monday:
▪ Johnson’s bill uses the governor’s tax plan as a template and makes a few changes.
Most notably, he doesn’t conform with the elimination of the $4,050 federal dependent tax exemption — meaning the exemption would continue to be available to state taxpayers.
The governor’s bill, which passed the House on a 59-11 party-line vote last week, mirrors federal code by eliminating the exemption. That would cost Idaho families $139.5 million per year, although it would be partially offset by a new, $42.3 million child tax credit.
Johnson’s plan avoids the impact on families by keeping the exemption in place. He also reduces corporate and individual income tax rates by 0.3 percent, rather than the 0.475 reduction the governor proposed.
▪ The Barbieri-McDonald “BIG Tax Relief Plan” — so named for its effect on businesses, individuals and groceries — combines income tax relief with a grocery tax repeal. Among other changes, it reduces individual income tax brackets by 0.5 percent. The top rate would drop from 7.4 percent to 6.9. This provision provides an estimated $150.6 million in tax relief.
It also cuts the corporate income tax rate from 7.4 percent to 5.0 percent, while eliminating the investment tax credit. The net effect of these changes would be a $29.1 million reduction in business taxes.
And it eliminates the 6 percent sales tax on groceries, as well as the grocery tax credit. In order to hold cities and counties harmless, their share of sales tax revenues would increase from 11.5 percent to 13.2 percent. The net cost of these provisions would be $85 million.
Overall, the bill would cut state general fund tax collections by an estimated $264.7 million.
Had it included full conformity, like the governor’s plan, the net cost would be reduced by $97.4 million. However, Barbieri said conformity should be addressed separately, which leaves his bill as a straight tax cut plan.
▪ Rep. Jason Monks, R-Nampa, introduced legislation that would cut corporate and individual income tax rates by 0.1 percent whenever year-over-year revenue growth equals or exceeds 6 percent.
The intent, he said, is to provide a long-term plan for tax reduction, while still acknowledging the need for additional revenues to maintain government services.
At current levels, Monks said, a 6 percent increase in year-over-year revenues would generate about $204 million in additional funding. His bill would use $36.5 million of that for tax relief, leaving $167.5 million for other state needs.
The 0.1 percent reduction would continue until the top corporate and individual income tax rate dropped from 7.4 percent to 6.0.
▪ Rep. Clark Kauffman, R-Filer, introduced a new sales tax exemption for members of the Idaho Association of Free and Charitable Clinics.
There currently are 10 free medical clinics in Idaho, he said, including the Snake River Community Clinic in Lewiston. Exempting them from the state sales tax would reduce state tax collections by about $10,000 per year.
▪ The Idaho Association of Commerce and Industry, together with Rep. Mike Moyle, R-Star, and Sen. Marv Hagedorn, R-Meridian, proposed legislation that gives county commissioners the option to waive the personal property tax for businesses in their jurisdiction.
IACI has long maintained that the personal property tax is unfair, out-dated and difficult to administer. Lawmakers previously have approved legislation that exempts all but the largest businesses in the state from paying the tax; however, efforts to completely eliminate it have stalled in recent years.
This bill would let county commissioners grant exemptions for some or all of the remaining personal property within their jurisdiction, following a public hearing. The exemption would apply to all taxing jurisdictions in the county.
▪ The Idaho Association of Counties introduced legislation to raise the cap on county justice levies from 0.2 percent to 0.25 percent of county market values.
The justice levies are used to pay for the sheriff’s office, juvenile detention, jail operations and other county law enforcement functions.
Seth Griggs, executive director of the association, said several counties are bumping up against the 0.2 percent cap. Raising the cap to 0.25 percent would allow them to generate some additional revenue. However, the 3 percent cap on overall budget increases would remain in place; consequently, counties would have to reduce other levies to offset any increase in the justice levy — unless they can tap any forgone property taxes.
▪ Rep. Moyle introduced a second bill that would prevent new or renovated buildings from being taxed during construction if they’re going to be used for a tax-exempt purpose.
Counties can increase their annual budgets by 3 percent, plus any growth attributed to new construction. Moyle said the intent of this bill is to keep tax-exempt buildings from being counted as new construction.
The Spokesman-Review noted the bill would be retroactive to Jan. 1, 2016 — potentially overturning a recent Idaho Supreme Court decision that the Simplot Foundation’s JUMP building in downtown Boise owes property taxes during construction, because a construction site is not a tax-exempt purpose. Moyle didn’t mention the Simplot case when he presented his bill.
▪ Rep. Ron Nate, R-Rexburg, introduced a bill requiring a “disclosure statement” on every bond levy ballot measure that clarifies the term of the bond and anticipated cost per $100,000 in taxable property value.