Income tax cut and rebate bill sent to amending order for adjustments
Opponents say education funding should be state’s priority
Hallway outside the Lincoln Auditorium (left) at the Idaho State Capitol building on March 23, 2021. (Otto Kitsinger for Idaho Capital Sun)
An income tax bill that would lower Idaho’s top corporate and individual tax brackets and issue a tax rebate to Idaho residents was sent to the 14th Order for amendments by the Senate Local Government and Taxation Committee on Thursday.
Senators said adjustments need to be made to the tax bracket numbers, and one senator mentioned the idea of reducing the number of overall income tax brackets in the amendments to the bill.
The bill lowers the top income tax bracket from 6.925% to 6.5%, while the six other lower brackets would see reductions as well. According to the bill’s fiscal note, this would provide $169.4 million in ongoing tax relief.
It passed the Idaho House on March 17 by a vote of 58-12, with only Democratic lawmakers opposed.
The legislation also allocates a one-time sales tax/income tax rebate of $220 million, which represents a minimum of $50 for a taxpayer and dependent or 9% of income taxes paid in 2019, whichever amount is greater.
Rep. Steven Harris, R-Meridian, told committee members the money is already earmarked based on Gov. Brad Little’s proposed budget, and it will go into effect immediately if the bill becomes law.
“We can afford to do it, the money’s been budgeted for it, and it’s time to do it,” Harris said.
The committee members heard testimony from Kathy Dawes, who spoke on behalf of the League of Women Voters in Moscow and testified against the bill.
“The league believes tax cuts and rebates are not appropriate at a time when 80% of Idaho’s school districts have to depend on supplemental levies of more than $200 million every year just to maintain the educational programs,” Dawes said. “Until education is properly funded, the burden of supplemental levies is going to be evident to folks on their property tax bill.”
Representatives from the Associated Taxpayers of Idaho and the Idaho Association of Commerce and Industry spoke in favor of the bill, saying it provides necessary relief and is the right thing to do for Idaho taxpayers.
Sen. Ali Rabe, D-Boise, supported the motion to send the bill to the Senate floor, but voiced her opposition to the idea in committee and said she would likely vote against it on the floor.
“I do wish that there was more relief in this bill, specifically for lower income folks in our state,” Rabe said. “… They are receiving limited relief under this current plan. I also am concerned about the ongoing affordability considering we are not funding basic needs in our state right now.”
Sen. Mark Nye, D-Pocatello, motioned twice unsuccessfully to hold the bill in committee.
Once the bill is amended, it will likely come before the full Idaho Senate for a vote, or could be sent back to the committee for reconsideration.
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