The House passed a tax cut and rebate bill worth $ 389.4 million on Wednesday after a debate cut by partisan standards. The bill is now going to the Senate.
House Bill 332 would do two things:
- This would permanently reduce all income tax brackets, representing a tax cut of $ 169.4 million.
- It would give Idahoans one-time discounts – of $ 50 per person or dependent, or 9 percent of 2019 income taxes, whichever is greater. The discounts are priced at $ 220 million.
Co-sponsor Steven Harris, R-Meridian, called the bill “perhaps the greatest tax relief in Idaho history.”
Democrats argued that the bill could jeopardize the US dollar, provide limited relief to low-income Idahoans, and give away money the state needs for infrastructure and education without addressing major property tax concerns.
Republicans, who passed the bill by 58-12 votes, argued the bill gave all Idahoans a fair return on state reserves. Idaho has a record surplus expected to be $ 600 million.
The tax burden is important to education as it could directly affect government funding. Education receives approximately 60 percent of Idaho’s general fund budget. Sales and income taxes make up the general fund dollar.
In a press release on Tuesday, the Idaho Center for Fiscal Policy said the bill will continuously cut government revenues by $ 160 million to $ 170 million in fiscal 2022 after the initial cost of $ 386 million.
The center also wrote that the introduction of the tax cut could affect federal fiscal aid from the US bailout and reduce Idaho’s expected $ 1.2 billion allocation by about $ 800 million. Other states have paused to pass tax cuts until they learn more about how those changes could affect federal funding, the center said.
Rep Colin Nash, D-Boise, said Idaho could use federal funds to invest in water projects and broadband projects, and told the House to wait.
The Republicans hit back, calling the federal aid money the “Destroy America Plan”. Greg Chaney, R-Caldwell, threatened to appeal a possible backing to the Supreme Court, saying Idaho was being hampered by “fiscal federalism”.
Harris said the state only intends to return money that is already in state coffers that have been raised by Idahoans.
“I can’t imagine the argument I would have to make to say, ‘Well, don’t give tax breaks to our citizens as it could jeopardize federal money entry into states,” said Harris. “That would be a Argument I wouldn’t dare. “
The Boise Democrats argued that the bill does not provide the Idahoan-required relief on property taxes, and that giving away funding for things like education could add an even bigger burden to property taxes by forcing schools to collect dues.
“The ramifications of this bill are that citizens of that state will be denied the money associated with tax breaks, including funding that state’s vital services and functions such as education,” said Rep. Steve Berch, D-Boise. “If we don’t fund education properly and take the money we have and spend it elsewhere to add to that cost of raising property taxes.”
R-Star, a co-sponsor of the bill, House Majority Leader Mike Moyle, pushed back to what he called the “perception that we should increase your income taxes in order to pay your property taxes”. He also argued that low-wage earners would still benefit from the bill, saying that Idahoers who didn’t pay state income tax would still get some money back.
“This is the best way to return all of the extra money we have now and do it in a fair way that benefits everyone,” said Moyle. “I hope from this debate that when we talk about taxes we have learned that it is not just black and white. There is a lot of gray and a lot of moving parts. “
The Idaho Education News remotely covered the debate on Wednesday.
About Sami Edge
University of Oregon graduate reporter Sami Edge joined Idaho Education News in 2019. She is a 2019 Education Writers Association Scholar reporting on results from Latino students in Idaho. She is also a 2019 American Press Institute Fellow. She can be reached at [email protected].
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