Passing reckless tax cuts has become routine for Idaho’s Republican Legislature.
Wednesday, on a party-line vote, the House did it again.
But rarely has there been such an obvious display of sheer stupidity. It almost makes one wonder how some of these people would fare if they were playing with their own money instead of yours.
For the better part of two decades, Idaho Republican lawmakers have followed a recipe for starving the beast of state government and public education.
First, they low ball their estimate of how much tax revenue the state will receive during an economic downturn.
Next, they cut more deeply into state budgets than warranted.
Finally, when their projections prove to be unduly pessimistic, they don’t restore spending. They declare a surplus — and hand the money over to Idaho’s economic elites.
And so it goes with House Bill 332, the eye-popping $389 million package that in the span of about 24 hours went from introduction in the House Revenue and Taxation Committee to passage on the House floor. It continues Idaho’s retreat from a progressive income tax toward a flat tax that works a greater hardship on people who work for a living.
If you doubt that’s been happening over the years, review your own income tax statements.
As the Idaho Center for Fiscal Policy documents, the permanent portion of this cut reduces income tax rates more at the top than at the bottom. The one-time rebate promises a paltry $50 for people at the low end of the economic ladder while leaving the lion’s share for those at the top.
So, the Center says, families earning less than $66,000 a year may not even notice the $78 to $231 reduction in their tax bill. But the top 1 percent will take home, on average, another $8,863.
Moreover, the bulk of a $17 million cut in the corporate tax bill will go to the 81 percent of shareholders who don’t even live in the Gem State.
Talk about adding insult to injury. This pandemic didn’t nail people at the top. They continued to work at home. Many of them were deemed essential workers. But what about the restaurant waitress who was already struggling to make ends meet on Idaho’s traditionally low wages when her hours were cut? If you want to help her, redeem the 15-year-old pledge to remove the regressive sales tax from groceries. Or rescue beleaguered homeowners who are paying more than their fair share of property taxes because the Legislature deliberately shifted more of the burden on them to benefit commercial and business property owners.
What about the students who spent the better part of a year falling behind in remote learning? Why would state lawmakers remain content to cut taxes when the state continues to allocate the least amount of money per pupil in the country?
This Legislature is about to pass the smallest increase in the public school appropriation in six years while continuing to raid the general fund — half of which goes to public schools — for transportation rather than make long-haul truckers pay the full costs of the damage they inflict on highways.
And where’s the guarantee that by cutting taxes now when the economy is on the rebound, this Legislature isn’t setting the stage for another bust when the next economic slump hits?
Now comes a double whammy.
Before passing the American Rescue Plan, Democrats inserted a poison pill: Any state that cuts taxes could lose the same amount from the federal bailout they’re about to receive.
Idaho’s share comes to $1.25 billion, according to the Tax Foundation’s inventory.
So between March 3 and sometime in 2024, the federal government may claw back the same amount — dollar for dollar — from Idaho’s federal package that lawmakers intend to parcel out among the comfortable and the investor class.
It’s not set in stone. The Treasury Department has to weigh in.
But Sen. Mike Crapo, R-Idaho, the ranking Republican on the Finance Committee, sounds worried: “If a state like Idaho wants to provide tax relief in the interest of economic recovery, and to help people return to earning their livelihoods, the American Rescue Plan says it will be financially punished by the federal government.”
So does Maryland’s state Senate, which put tax cuts on hold: “I think it’s a bit too early to know. We want to see how the Treasury interprets some of these provisions,” Senate President Bill Ferguson, D-Baltimore City, told Marylandmatters.org. “And you know, we want to make smart decisions with as much information as possible.”
As does Ohio Attorney General Dave Yost, who’s leading a legal challenge against the provision. In their lfilings, Ohio’s lawyers lay out the threat: “The tax mandate thus gives the states a choice: They can have either the badly needed federal funds or their sovereign authority to set tax policy. But they can not have both. In our current economic crisis, that is no choice at all.”
Yet, Idaho’s best and brightest would rather fly blindly into a mountain. Why not wait until the path is clear?
It makes you think they’re rushing to pass this bill before the rest of us figure out what’s in it. — M.T.