By Melissa Davlin and Ruth Brown, Idaho Reports
Gov. Brad Little has called a special legislative session to create a new flat income tax, dole out tax rebates, and set up new distribution mechanisms for public education.
The session, scheduled to begin at 8 a.m. on Sept. 1, comes after outcries about inflation and questions about how the state would spend its record-setting budget surplus, which is approaching $2 billion.
When they arrive in Boise, lawmakers will consider one proposed piece of legislation from the governor’s office. If passed, the wide-ranging bill will:
- Create a flat income and corporate tax of 5.8 percent;
- Give $300 in tax rebates to individual filers and $600 to joint filers, or 10 percent of the 2020 income tax filing, whichever is higher
- Distribute $330 million annually to K-12 education
- Distribute $80 million annually to a newly created in-demand careers fund
The legislation would be the largest tax cut in Idaho history, with $500 million going to Idaho residents in rebates and more than $150 million in ongoing tax cuts. Read the full draft proposal below.
Currently, Idaho has four graduated rate income tax brackets, though the vast majority of those who file fall into the top bracket of 6 percent. The bill would exempt from taxation the first $2,500 of taxable income. Seniors who don’t paid income tax but receive the grocery tax credit will also receive a rebate.
The Idaho Constitution allows the governor to call the Legislature into session outside of its regular sessions, which begin in January each year. In his proclamation, signed Tuesday, Little said the Legislature cannot consider any other issues.
“Inflation is at a 40-year high, putting gas, groceries, and other necessities out of reach for many Idahoans,” Little wrote in his proclamation. “Idaho taxpayers and the education system are especially imperiled by the consequences of historic inflation.”
Bill would preempt the Quality Education Act
If the legislation passes, the Quality Education Act – a ballot initiative set to be on the November ballot – would essentially be void, even if voters choose to pass it. The Quality Education Act would add a new bracket to the tax code, increasing taxes for people with income above $250,000 or $500,000 for joint filers. The initiative would also increase the corporate income tax.
Complicating the question of education funding, Little’s draft bill also includes an advisory question about the proposal. Advisory questions don’t create or affect policy; Rather, it shows whether voters support a given proposal, and offers guidance to the Legislature on future policy.
If the legislation passes, that advisory question will appear with the Quality Education Act on the ballot. When asked about the voter initiative, Little said he prefers his approach to funding education.
“The last thing you want to do when people are having a hard time is say ‘Here, we’ll help you out, we’re going to raise your taxes,'” Little said during Tuesday’s press conference.
Sixty lawmakers from both chambers have signed on as cosponsors to the legislation. Multiple lawmakers attended Tuesday’s press conference, including outgoing Senate Local Government and Taxation chairman Jim Rice, Senate President Pro Tem Chuck Winder, Republican lieutenant governor candidate House Speaker Scott Bedke, and Senate Minority Caucus Chair Janie Ward-Engelking.
Idaho Reports will air a special episode on the legislative session at 8 pm Friday on September 2 on Idaho Public Television. The episode will also be available online at idahoptv.org.
“Do you approve or disapprove of the State of Idaho using the record budget surplus to refund $500 million back to hardworking Idaho taxpayers, cut ongoing income taxes by more than $150 million, and put more money in our classrooms by increasing education and student funding by a record $410 million? Your approval of this effort would combat historic inflation by returning money to taxpayers, creating a simple flat tax, and making the single largest investment in public education in Idaho history.”
Proposed advisory question language