Idaho governor signs record $600 million income tax cut
Idaho Governor Brad Little signed into law the largest tax cut in state history on Friday, hosting the signing ceremony at a software company in Meridian to recognize the role that companies have played in the state’s economic recovery during the coronavirus pandemic.
The $600 million cut includes $350 million in one-time rebates and $250 million in permanent personal and business income tax cuts.
“We think in government we have something to do with this,” the Republican governor told about 100 In Time Tec workers, including CEO Jeet Kumar. “It’s the entrepreneurs, it’s the businesses, it’s the workers who went out, created the wealth, created the jobs, created the prosperity.”
Little was joined by House and Senate Republican leaders for the signing of the first bill to make it through the legislative process this session.
Donors say the tax cuts bring money back to those who paid for it. Opponents say the tax cuts mainly benefit the wealthy at the expense of essential government services such as education. The bill received no support in the House or Senate from Democrats, who generally said the money would be better spent addressing neglected maintenance of state school buildings and catch up on a backlog of road and bridge repairs.
Little promoted the tax cut in his state of the state address last month as part of his “Leading Idaho” plan that also includes a record $300 million increase in education spending. dollars, as well as $200 million in ongoing spending on roads and bridges, the largest increase ever for transportation. . Little calls the three goals a trifecta.
“These were all somewhat lofty goals,” Little said. “I just didn’t think we would do them all at once.”
The state has a projected surplus of $1.9 billion, or about 40% of the typical state budget. It is used for discounts of $350 million.
Some lawmakers have expressed doubts about passing the tax cut ahead of the spending legislation. Last year, far-right Republicans targeted education spending and succeeded in cutting higher education budgets.
But Little and House and Senate leaders said they believe they could guide the education and transportation funding bills through the process.
“I think there’s a general consensus that our success here in Idaho starts in the classroom, and we need to have a good, well-paid teacher there,” said the Republican House Speaker, Scott Bedke.
Republican Senate President Pro Tem Chuck Winder said the state has the opportunity to “do a lot of things that we never thought we’d have the opportunity to do.”
The $350 million tax refund includes 12% of state income taxes returned for filers in 2020, or $75 per taxpayer and dependent, whichever is greater.
Permanent tax cuts lower income tax rates, including lowering the top rate from 6.5% to 6% and reducing the number of personal income tax brackets from five to four .
Individuals earning more than approximately $8,000 and couples earning more than approximately $16,000 are in Idaho’s top tax bracket, meaning Idaho income tax is essentially a flat tax, with most paying the same rate.
The corporate income tax under the bill would be reduced from 6.5% to 6%. Proponents of the reduction said it would keep Idaho competitive with surrounding states in attracting business.
Ongoing tax cuts would be partially offset by $94 million a year from the Tax Relief Fund, which collects sales tax on online purchases.
Kumar, CEO of In Time Tec, said a half percent cut didn’t sound like much, but was actually a big help for businesses.
The state “becomes a place where we can create an economic ecosystem and have a business like ours that can thrive, grow and make a difference,” he said.
He said the company has 120 employees and is looking to increase that number to 200 over the next 18 months.
The $600 million tax cut is the second major tax cut in two years, following last year’s $383 million cut, which included $220 million in immediate one-time tax refunds income and $163 million in ongoing income tax relief.
“A great day in Idaho for sure,” said Republican Rep. Steven Harris, one of the sponsors of the bill signed into law on Friday. “For families. For companies. Huge.”