GOP Tax Plan is Wrong for Idaho
By: Rep. Lauren Necochea and Sen. Ali Rabe
Our state’s revenue system makes schools, roads, and other building blocks of the economy possible. Idahoans deserve a fair and responsible tax code to accomplish these investments and build widespread prosperity. Unfortunately, the House GOP tax plan makes sweeping changes that are neither fair to working Idahoans nor responsible.
This bill — which was unfortunately signed into law by Gov. Brad Little — makes Idaho ineligible for a portion of our much-needed infrastructure dollars, threatens our ability to balance our budget, and overwhelmingly directs resources to the people (as well as profitable corporations and out-of-state shareholders) who need them the least. Despite eating up hundreds of millions of dollars, the legislation does nothing to address the tax solution that Idahoans actually want: lower property taxes.
We should be enacting policies that build our middle class and strengthen our economy, not more giveaways for the wealthy and well-connected. The lopsided benefits of the GOP plan are clear. Idahoans in the top 1% will receive nearly $9,000 each year, on average. Middle-class families will see their taxes go down by just $246, on average. Households with very modest incomes can expect around $80 in tax savings.
Democrats in both the House and Senate tried to introduce numerous pieces of legislation to support working families while balancing tax policy with much-needed investments in education. We have been pushing for increasing the grocery tax credit that everyone receives for an equitable benefit, increasing the child tax credit, as well as ways to reduce residential property taxes, like leveraging state funds, expanding assistance, and increasing the homeowner’s exemption. The majority party denied us hearings.
Critical needs like education and infrastructure will continue to be underfunded by the state and passed on to residents in other ways because of this legislation. In the last five years alone, school districts across the state had to float nearly $2.1 billion in local bonds and levies. A proposal for optional, full-day kindergarten could have helped to alleviate some of that burden, but it also was denied a full hearing.
While the GOP tax plan is bad policy at any time, its timing is also horrible. We have just received $1.25 billion from the American Rescue Plan Act that will allow our state to assist businesses impacted by COVID and also make critical long-term investments in broadband, clean drinking water, and wastewater management. We have already heard how dire these needs are in much of our state. But these dollars come with an expectation: that we won’t slash our own revenues while holding our hand out to accept federal dollars.
For every dollar in revenue cuts that Idaho enacts, one dollar from our allotment of American Rescue Plan funds could be clawed back. That means revenue cuts today can actually cost the state twice as much. We are still waiting for guidance from the U.S. Treasury to understand how specific cases will be handled. The impact of HB 380 alone could mean a loss of $383 million, or one-third of our relief funds. It would have been much more prudent to wait to enact these drastic cuts until we knew the true cost, but it was signed into law anyway.
We have to stop creating tax policy that leaves everyday Idahoans behind and jeopardizes our state. Our citizens, many of whom are experiencing extreme financial distress, deserved better than this mediocre attempt.
