An Idaho tax policy group says a proposed cut in the state’s top income tax rates and bump-up in the food tax credit to help lower-income earners overwhelmingly benefits Idaho’s wealthiest residents.
The top fifth of earners in Idaho, with incomes above $99,000, would receive nearly three-fifths of the overall monetary benefit. Idaho’s richest one percent, those earning $444,000 or more, would receive an average break of $815. Those in the middle, with incomes between $41,000 and $64,000, would see $23 on average, while those at the very bottom income levels could see as little as $7.
A proposal introduced in the House this week would cut the state corporate income tax rate by a tenth of a percentage point, to 7.3 percent, and the top two personal income tax brackets by the same amount, to 7.3 percent and 7.0 percent. It would increase the grocery tax credit by $10 per person per year for those whose incomes fall below the top two brackets. Currently, that level is $7,260.
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The policy center puts the overall impact of the cut at $31 million in reduced revenue. Bill sponsors put the impact at $27.8 million. The proposal is due for hearings in front of a House panel.
Beyond the impact on residents, the analysis also reviews how cuts might affect state spending priorities, such as education. It looks at long-term state revenue trends, providing data to show that inflation-adjusted general fund revenue per capita has declined 13 percent over the last decade.
General fund revenue, generated from tax collections, has also declined relative to state personal income.
“The Legislature will have to weigh the short- and long-term impact of reducing state revenues, both in terms of what it means for the state’s ability to make key public investments for Idaho’s future and implications for the stability of state finances in both good times and bad,” the study concludes.