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Bill to cut income tax introduced in Idaho House committee

Legislation to cut Idaho’s income tax and provide one-time rebates was introduced Wednesday in the House Revenue and Taxation Committee.

Gov. Brad Little delivers his State of the State address inside the house chambers at the state Capitol building, Monday, Jan. 10. AP Photo/Otto Kitsinger

Gov. Brad Little outlined the proposal in his State of the State address earlier this week, and the House committee moved with unusual speed to get it introduced on the third day of the session, the Idaho Press reported.

The bill would provide one-time rebates of $75 or 12% of 2020 state income taxes paid — whichever is higher — to all Idaho residents who filed state tax returns in 2019. It also would consolidate Idaho’s five income tax brackets into four, permanently reducing income tax rates for individuals and corporations, adding $251 million a year in ongoing tax cuts.

Rep. Lauren Necochea, a Democrat from Boise, was the only lawmaker to vote against introducing the bill, but said she would have more to say about the legislation when it is scheduled for a full hearing. That date has not yet been set.

“This is just not the tax relief Idahoans want, so I’m not going to be able to support the motion to print,” she said.

Rep. Steven Harris, a Republican from Meridian and the committee chairman, is one of the bill’s sponsors.

“The bill does a few simple things, but will have dramatic fiscal impact, both for our taxpayers but also for the state government,” Harris told the panel.

The bill would partially offset the cost of the ongoing cuts to the state treasury by permanently tapping $94 million a year from the Tax Relief Fund, a state fund that now collects all sales taxes paid on online purchases, rather than sending those taxes through the same distribution formula to local governments and the state general fund as other sales taxes.

The bill would drop Idaho’s top income tax rate from 6.5% to 6%. The corporate income tax rate would also drop from 6.5% to 6%.

The House Republican Caucus, in a statement immediately after the bill was introduced, called it “major tax relief,” and Harris said the bill allows “working Idaho families to keep more of what they’ve earned.”

House and Senate Democrats also immediately issued a statement on the new legislation, saying it will largely benefit the wealthiest taxpayers at a “huge price tag.”

Necochea said it would take other opportunities — such as reducing property taxes or eliminating the grocery tax — off the table.

“Every major tax bill in Idaho for at least the last decade has prioritized profitable corporations and the wealthy,” she said. “We have an opportunity this year to prioritize working Idahoans and bolster our middle class.”

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