With a budget surplus and massive Federal tax changes, the Governor and Legislator had the opportunity to implement major tax deductions – but instead, decided to protect the status quo and dupe taxpayers into believing that they were getting tax cuts.
Politicians continue to brag about passing “the largest tax cut in Idaho history”. If this cut was distributed equally to all Idahoans, each person would save less than $75. However, it is not distributed equally. Up to 99% of families with 4 children and 95% of families with 3 children and families with 2 children earning less than $93,000 will see virtually no savings.
Idaho’s tax rates should be among the lowest in the country. However, that is not the case. When looking at Idaho’s combined tax rate, Idaho is consistently in the middle of the pack. In 2010 and 2016 Idaho ranked 25th and 23rd, respectively. When comparing Idaho to the 8 western states, Idaho ranked 7th and 5th, respectively. The new law took away deductions for exemptions (husband, wife, kids), increased the standard deduction, added a deduction in “pass-through” income of 20%, and decreased tax rates by 0.45%.
You don’t need to dig too deep to realize that the tax cuts benefit only a privileged few.
Let’s look at a typical middle-income family with three children ages 17, 15, and 13. They have wage income of $85,000, a mortgage of $150,000 and donate 10% of their income to charity. A prior law would place their taxable income at $48,250 and they would pay $3,069 in Idaho tax. Under new law, their income and tax would be $61,000 and $3,313, respectively. That’s an increase of $244 or 8%. A similar family with two small children will see a decrease of only $55.
The new law, touted as “the largest cut in Idaho history” actually keeps the vast majority paying near the status quo. It benefits only a small segment of taxpayers (top 4%).
All of this while Idaho pads its coffers in the name of a rainy-day fund. As of June 30, 2017, that fund was around $310 million and is expected to grow by an additional $200 million by June 30, 2019.
Does the State need to hold a half a billion dollars? Do they believe that the government manages funds better than individuals? Are they holding taxpayer money to fund future pet projects?
Idaho should lead the country and showcase successful conservatism. Instead, our conservatism is thinly veiled while we struggle with issues caused by liberal laws and policies. Get involved, learn about what happens at the Capitol during a session. Vote for candidates that are honest in their conservative ideals. Vote for candidates that will decrease government and implement a tax policy that will have a real impact.
Posted with permission from the Idaho Business Alliance