BOISE, Idaho — Lawmakers hit the ground running this week and already have a major tax bill to debate. Idaho Republicans are touting their new legislation as a simple giveback and tax cut for Idahoans as the state sits on millions in budget surplus dollars.
“We’ve got inflation going crazy across the nation and across the state," House Majority Leader Republican Mike Moyle said. "It’s important to give this money back to the people."
Rep. Moyle is one of the sponsors of the tax bill. He said the bill will consolidate Idaho’s income tax brackets from five down to four, with new lower rates of 1%, 3%, 4.5%, and 6% for each bracket. The highest bracket being people who make $5,000 and more.
The bill would also lower the corporate income tax from 6.5% to 6%, and it provides a one-time income tax rebate of $350 million, returning approximately 12% of Idaho tax paid in 2020 or $75 for each taxpayer and dependent, whichever is greater.
“Most people in Idaho are in that upper bracket so we are taking care of most Idahoans with that bill," Moyle said. "But it is, ya know, some people don’t pay any taxes. It makes it hard to give back money when they don’t pay taxes that’s why the bill is written the way it is, we do give them $75 for every man woman and child if they don’t pay taxes."
Rep. Moyle said with a budget surplus, Republicans simply want to give Idahoans their tax dollars back.
“Get it into their hands so they can offset some of the costs that are going up now,” Moyle said.
Idaho Democrats say they appreciate the idea, but that this tax bill does not help those who need it most.
“Now we have the opportunity to prioritize working Idahoans and bolstering the middle class and this tax bill would squander that opportunity,” Assistant House Minority Leader Democrat Lauren Necochea said.
Rep. Necochea said the cuts would direct the largest benefits to the top of the income spectrum. She explained that someone with $1,000,000 in annual taxable income will receive an ongoing yearly tax cut of $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of $75.
“Idaho democrats would love to see us take those dollars that we have that are available and put them into property tax reduction and we would also want to have a conversation about repealing the sales tax on groceries,” Necochea said.
Necochea adds that the tax brackets proposed do not really translate to everyone giving a fair share.
“Yeah, there is no reason why a millionaire should pay the same percentage of their tax as a teacher and we would absolutely support expanding those tax brackets to make those adjustments,” Necochea said.
Moyle said the tax cut will benefit all Idahoans.
“Every man woman and child is going to get something," Moyle said. "It’s a good bill, it’s going to lower our tax rates, it makes us more competitive nationwide and it’s going to help the state of Idaho looks better to big businesses here. It’s going to help people stay in their homes and jobs and work here and stay here for their lives. It’s going to make things better for Idahoans, which is a good thing."
Idaho Democrats argue the surplus being used for this cut is not a surplus, but instead the result of bad policies and investments.
“We underfund a lot of the things that local government has to do and that schools have to do," Necochea said. "If we put more of that state funding and direct it to schools and local governments, we could reduce property taxes substantially and that’s what Idahoans are asking for."
Moyle said it does not have to be one or the other.
“There is enough to do a lot of things that need to be done and want to be done for a long time,” Moyle said.
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