BOISE — The first bill of the 2022 legislative session proposes a record $600 million in tax cuts.
The measure was introduced Wednesday in the House Revenue and Taxation Committee.
“The bill does just a few simple things, but it has a dramatic fiscal impact for taxpayers and, I suppose, for state government,” said Rep. Steven Harris, R-Meridian, who heads the committee.
Gov. Brad Little threw his support behind the legislation Monday in his State of the State address. All four members of the House Republican leadership team also looked on Wednesday, as Harris walked the committee through the proposal.
The first thing the bill does, he said, is consolidate the state’s five individual income tax brackets into four brackets. It cuts the top rate from 6.5% to 6%; the rate on the three lower brackets would be 1%, 3% and 4.5%, respectively.
The corporate income tax rate would be cut as well, from 6.5% to 6%.
“This legislation also provides a one-time tax rebate of $350 million,” Harris said.
Similar to the $220 million rebate that was approved last year, he said, this new rebate is based on how much income tax someone paid in 2020. Any full-year Idaho resident who files a tax return for 2021 would receive to rebate equal to 12% of their 2020 taxes paid or $75 per taxpayer and dependent, whichever is greater.
Cutting the corporate and individual income tax rates has an ongoing cost of $251 million. That would be covered by $157 million from the general fund, plus $94 million from a dedicated tax relief fund that was created to siphon off sales tax receipts from online purchases.
The $350 million rebate would be covered by a portion of the record $1.9 billion budget surplus projected for fiscal 2022, which ends June 30.
The bill represents the largest tax cut in state history. It only took a few minutes to introduce the measure. There was no discussion, although that will change once it comes back to committee for a public hearing.
House Democrats condemned the bill, saying it provides a big windfall for wealthier Idahoans while doing little for lower income residents.
Moreover, “this costly legislation will take other opportunities off the table, such as reducing property taxes or repealing the grocery tax,” said Rep. Lauren Necochea, D-Boise. “We have an opportunity this year to prioritize working Idahoans and bolster our middle class. I’m extremely disappointed to see that squandered with more of a trickle-down approach.”
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