Gov. Brad Little signed House Bill 436, the largest tax cut in Idaho history, into law on Friday, Feb. 4.
Little hosted a signing ceremony on Friday afternoon at In Time Tec in Meridian with several legislative leaders, including Speaker of the House Scott Bedke, R-Oakley; House Majority Leader Mike Moyle, R-Star; and Senate Pro Tem Chuck Winder, R-Boise.
The package includes $350 million for a one-time expenditure for tax rebates to most Idaho taxpayers, and $251 million in income tax reductions on an annual basis beginning in 2023, for a total of $600 million. The bill included an emergency clause with a retroactive date to Jan. 1. According to a press release, the rebate will be distributed to Idahoans sometime this spring and the income tax brackets will be lowered starting in July.
Little said he had three aspirational goals for the coming year: significant tax relief and large investments in education and transportation.
“I just didn’t think we’d get them all done at once, and with my partners here behind me, we will have it,” Little said. “I remember my mother telling me you can’t have your cake and eat it too, but we kind of are this year. That’s a great sign for Idahoans, a great sign for the economy, and we’re excited about that.”
According to estimates from Little’s office, the state will send more than $1 billion in income tax cuts to Idahoans over the next five years with the addition of the cut from House Bill 436.
“Government never spends its own money, it takes it out of the pockets, off the dinner tables of the citizens, and usually there’s a tendency with government to never give anything back,” Sen. Jim Rice, R-Caldwell, said. “… (We worked) to make sure that we prioritize giving money back to our citizens that you paid in, and also we’re not going to reach as deep into your pockets.”
Jeet Kumar, chief executive officer of In Time Tec, also spoke at the event and said the tax cut would make Idaho more competitive and allow companies like his to grow.
“Point-five (percent) is not much, but it’s quite a bit when talking profits,” Kumar said.
Idaho Democrats say tax cut is misdirected
Democrats in both chambers of the Idaho Legislature have been critical of the tax cut, saying it helps wealthy individuals the most while ignoring ideas to reduce property taxes, repeal the sales tax on groceries and pay off supplemental levies for school districts.
Sen. Carrie Semmelroth, D-Boise, told the Idaho Capital Sun that since she voted against the bill when it came before the Senate Local Government and Taxation Committee, she hasn’t heard from anyone who wanted her to vote for the legislation on the Senate floor.
“Instead, they’ve asked for meaningful property tax relief, repeal of the grocery tax and investing in areas of Idaho that are underfunded,” Semmelroth said.
Senate Democrats said in a press release that under the new law, someone with $1 million in annual taxable income will receive an ongoing yearly tax cut of over $5,000 on top of a nearly $8,000 one-time rebate, and Idahoans with lower incomes will receive a rebate of about $75.
Democrats added that the high price tag of the tax cut will take up much of the surplus funds that could instead be directed to other needs, including education and infrastructure needs that have been underfunded for many years, according to reports from the Idaho Office of Performance Evaluations.
“If you don’t make your mortgage payment for months on end, it can seem like you have a lot of money in the bank,” Semmelroth said.
Several other bills regarding property taxes and the grocery tax and grocery tax credit are under consideration at the Idaho Legislature, along with related bills that legislators say haven’t been introduced yet. Semmelroth said while some of those bills are ones she will support, there isn’t enough legislation that will help working class Idahoans in areas such as property tax relief.
The legislative session is expected to last until the end of March.
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