New legislation to increase the Idaho Child Tax Credit contained in the earlier House- and Senate-passed tax cut bill from $130 per child to $205 per child – at an estimated cost of $25 million a year – was introduced in the House Revenue & Taxation Committee this morning.
House Majority Leader Mike Moyle, R-Star, told the committee, “That should pick up just about all if not all of the concern on the larger families.”
Under HB 463, a $200 million-plus tax-cut bill that’s already passed both houses, families with three or more children would actually see an increase in their Idaho state income taxes, due to the interplay between federal tax code changes and Idaho’s tax laws. The $130 per child tax credit sought to partially offset that, but it would take $287 per child to fully offset it.
Rep. John Gannon, D-Boise, said, “The figure is about $287 per child tax credit that we’re going to need … just to make sure that the families are kept even. … So it appears that we’re still about $20 million short for Idaho families, and Idaho families are going to have an increase in taxes of about $20 million. Is there anything that you can do in this bill about that?”
Moyle responded, “I’ve seen some reports that say $205 gets ‘em all. … I don’t know who’s right.” He said, “I think that this is a fair compromise – it moves it closer to where we all know that those families are held whole. It’s a step in the right direction. Would I like it to be higher? I think obviously everybody would. … There’s a balancing act.” He added, “It gets us closer to keeping those families whole, but it also is taking a prudent approach.”
Gannon responded, “We’re striving to keep the families whole, but this is a $225 million tax cut. So the implication is that Idaho’s families are completely left out of the tax-cut part. Can we revise HB 463 at this time so that Idaho’s families are included in the biggest tax cut that we’ve had in decades?”
Moyle said, “Every one of these families will have a tax reduction at the federal level, and most of them at the state level. … All Idaho families that fall under this will receive relief, the question just is how much.”
Rep. Ron Nate, R-Rexburg, noted that the next item on the agenda was a proposed $50 million capital-gains tax-cut bill. “I’m going to make a substitute motion that we flip the script here – that we do the $50 million for the households and the $25 million to the businesses.” He moved to introduce Moyle’s bill with a change: Upping the child tax credit to $280 per child instead of $205. “That’ll make it a $50 million tax cut to families,” he said. “We can adjust the other RS as well and make sure that no families are harmed by our tax-cutting this year, which would be kind of ironic.”
Nate’s motion failed on a voice vote, with at least four votes in favor from Nate, Gannon, and Reps. Mat Erpelding, D-Boise, and Greg Chaney, R-Caldwell. Then, the original motion from Rep. Marc Gibbs, R-Grace, to introduce Moyle’s bill as-is passed on a voice vote without audible objection.
The bill is sponsored by Moyle, House Speaker Scott Bedke, and Senate Majority Leader Chuck Winder. Moyle said after the meeting that it was negotiated between House and Senate GOP leaders with involvement from the governor’s staff.
The second bill, on the capital-gains tax break, was introduced without discussion after committee Chairman Gary Collins, R-Nampa, said the intent was that it would be introduced only, and proceed no further this year. Moyle said it would expand a 60 percent deduction for capital gains to the sale or exchange of intangible personal property held for at least 12 months, such as stocks and bonds; he said it could benefit individuals or businesses. The bill has an estimated $50 million fiscal impact, and an emergency clause making it retroactive to Jan. 1, 2018.
Today’s votes clear the way for a full hearing in the committee on the bill to increase the child tax credit.