The Senate Local Government & Taxation Committee held a hearing on HB 675 this afternoon, the bill to increase the child tax credit created in the earlier big income tax cut bill from $130 to $205 per child, and voted to advance it to the full Senate with a recommendation that it “do pass.”
“I think everyone on this committee knows what this bill does,” Senate President Pro-Tem Brent Hill, R-Rexburg, told the committee. “It takes the $130 child tax credit that was in HB 463 and increases that to $205. Of course, the reason for that is that there were some inequities created in HB 463 for families with more children. … It was my hope that we could at some point increase that child tax credit. I’m pleased that we can do that this year, because I thought that would probably come up next year.”
The increase in the credit would add another $25 million a year in tax cuts, reducing the state’s general fund tax collections by that amount. HB 463 made $201.9 million in tax cuts, but also conformed Idaho’s income tax laws to recent federal changes – including the doubling of the standard deduction and the elimination of the dependent exemption – which has the effect of raising Idaho income tax collections next year by a net $97.4 million. The net impact is that HB 463 would mean the state would collect $104.5 million less in tax revenue next year; the additional child tax credit in HB 675 bumps that up to $129.5 million.
Without the follow-up bill, the interplay between the federal and state tax rules would leave Idaho families with three or more children paying more in Idaho income taxes next year than they pay now. The $130 per child tax credit sought to partially offset that, but it would take $287 per child to fully offset it, according to state estimates.
Miguel Legarreta, president of the Associated Taxpayers of Idaho, presented figures to the committee about the likely impact of the bill. Asked by committee members how much his research showed it would take to fully offset the hit to large families, Legarreta told the committee, “$287 gets us whole.”
Hill said the $205 would offset most of the impact, and the other changes in HB 463, including tax cuts for both individuals and businesses, likely would offset much of the rest, depending on a particular taxpayer’s circumstances.
Sen. Jeff Siddoway, R-Terreton, moved to approve the bill, and Sen. Steve Vick, R-Dalton Gardens, seconded the motion. Sen. Mark Nye, D-Pocatello, made a substitute motion to instead send the bill to the Senate’s amending order, saying he wanted to raise the child tax credit to $270 per child. But his motion died for lack of a second; the panel’s other Democratic member, Sen. Grant Burgoyne, D-Boise, wasn’t at the meeting. Siddoway’s motion then passed on a unanimous voice vote.