State Politics

Idaho income taxes: What would Moyle tax cut bill do?

House Majority Leader Mike Moyle, R-Star.
House Majority Leader Mike Moyle, R-Star. Idaho Statesman file

Moving quickly, the Idaho House on Wednesday approved cutting the state’s top two income-tax rates and increasing the food-tax credit for lower-income Idahoans on a vote of 53-16. Three Republicans joined 13 House Democrats in opposition.

Who’s behind the bill? House Majority Leader Mike Moyle, R-Star. It’s co-sponsored by 26 of 56 House Republicans, including the entire majority leadership team.

What does it do? Cuts the top two personal-income-tax rates by 0.1 percent, to 7.3 percent and 7.0 percent, respectively, and the corporate income tax rate by the same amount, to 7.3 percent. It also gives other Idahoans not in those tax brackets a $10 increase in their grocery tax credit.

What’s the cost? Tax relief has an estimated cost of $22.6 million; the grocery tax credit would cost $5.2 million.

Who benefits? Anyone with more than $7,260 in taxable income would see some tax relief, Moyle said. Idaho residents who make less than that, including the roughly 30 percent of Idahoans who pay no income tax at all, would benefit from the higher grocery tax credit, unless they are in prison or receive food stamps.

Why now? Moyle said he tried to give low-income earners a break while also “helping the state look marginally better.” Idaho tax-cutters have long looked to trim Idaho’s top rate to below 7 percent. “We’re talking about $28 million in tax relief back to those people in the state of Idaho that send us the $3.3 billion that we’re going to spend this year,” he said. The tax cut would benefit three out of four Idaho taxpayers, he said.

Idaho’s overall tax burden may compare favorably with other states, Moyle said, but it sticks out unfavorably when companies look specifically at income taxes. Wyoming, Washington and Nevada have no income tax. Utah has a 5 percent upper bracket; Montana has a 6.9 percent top rate, but doesn’t charge sales tax. “We aren’t competitive,” Moyle said. “I know we can’t compete with Washington and Nevada at zero, but we can get a little closer to Montana’s 6.9 percent.

Who’s against it, and why? The League of Women Voters of Idaho opposed the bill, noting that the number of school districts needing supplemental levies has nearly doubled in the last decade. The Idaho Public Employees Association also spoke in opposition.“This tax cut would give me personally $23 worth of tax cuts,” said Donna Yule, executive director of the Idaho Public Employees Association. “I can’t speak for every other Idahoan, but I’d sure rather see the state keep that $23 and put it toward educating my grandchildren or repairing our highways and bridges.”

Darcy James, representing the Idaho Interfaith Roundtable Against Hunger, said the organization usually would support a proposal to increase the grocery-tax credit. But its concern is that lawmakers will make up for the lost revenue by cutting other services for lower-income Idahoans.

Rep. Ilana Rubel, D-Boise, cited an analysis by the Idaho Center for Fiscal Policy that said the benefit to highest wage earners would be more than 100 times that of the lowest, $813 to $7. “Do we really think that the gap between rich and poor in this nation isn’t big enough, and that the Idaho Legislature needs to step in to see if we can just drive that gap a little wider?” she asked.

Who’s for it, and why? The Idaho Chamber Alliance is in favor. Ben Davenport, of Associated Taxpayers of Idaho, said his group’s analysis showed the tax cut would benefit 76 percent of all filers with taxable income, lowering taxes for 331,000 and raising the grocery-tax credit for 15,500. “While it is a modest reduction, you are touching a vast majority of the income-tax payers here,” Davenport said.

The combination of top rate cuts and increased food-tax credit was “about as fair as we can get it,” said Rep. Ryan Kirby, R-New Plymouth. A person earning $100,000 would see about $100 in lower taxes, while a married couple with three children that received the higher food-tax credit would see a $50 benefit.

What’s next? Not clear. Senate Local Government Chairman Jeff Siddoway, R-Terreton, has said he’ll hold the bill until it’s clear there’s enough revenue to meet the pressing needs in education and other state responsibilities. Siddoway said it will likely be mid-March before he holds a hearing.

Taxpayer group supports cuts

The Association of Idaho Taxpayers looked at how the proposed tax-cut bill would affect taxpayers at different income levels.

Filing

Status

Taxable Income

Current Tax Liability

Proposed Tax Liability

Difference

Single

$27,966

$1,720

$1,698

-$22

Family of four

$47,932

$2,649

$2,613

-$36

Single (at top rate)

$10,890

$455

$452

-$3

Family of four (at top rate)

$21,780

$710

$703

-$7

Single

$100,000

$7,050

$6,957

-$93

Family of four

$200,000

$13,898

$13,714

-$185

The Idaho Center for Fiscal Policy’s analysis showed that Idaho’s wealthiest residents stand to gain the most.

The policy center found that the top fifth of earners, with incomes above $99,000, would receive nearly three-fifths of the overall benefit. Idaho’s richest 1 percent — $444,000 and above — would receive an average break of $815. Those with incomes between $41,000 and $64,000 would see $23 on average. Folks at the very bottom income levels could see as little as $7.

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