Senate Oks Break For Married Couples Measure Phases Out ‘Marriage Penalty’ For Joint Tax Filers

A maximum $2-a-week tax break for married couples that advocates say will help keep Idaho families together cleared the state Senate Friday.

The action came despite warnings the tax break’s overall cost will further undermine state education aid.

“It goes in the pockets of primarily young married couples just starting out,” Republican Evan Frasure of Pocatello said. “If you look at the social costs of breaking up families, and it is absolutely devastating, you look at the advantage of maintaining families. It’s impressive.

“Anything I can do to encourage families, I’m going to do it,” Frasure declared.

The Senate voted 26-8 to eliminate the so-called marriage penalty in the state income tax over four years beginning with the 1999 tax year. More than 150,000 married couples would get the break.

The bill now goes back to the House for ratification of a year delay in implementing the phase-in for the tax break.

But the bill’s prospects with Gov. Phil Batt were uncertain because of its price - $4.5 million in the 1999-2000 state budget and $12 million a year overall when policy makers are worried that Idaho’s slowing economic expansion might actually stall.

“I have a strong concern in that direction,” he said.

Lawmakers spent most of the past 10 weeks cutting millions of dollars from Batt’s already bare-bones 1998 spending blueprint for fear that tax collections would not be enough to finance it. The exercise also may have created enough leeway to get the state past the 1998 election before a general tax hike has to be considered.

The governor had called for eliminating the penalty in his State of the State address. But he proposed reducing the standard deduction for single taxpayers and raising the deduction married couples get until the two were equal so there would be no effect on total tax collections.

The entire scheme was more symbolic to individual taxpayers, since impact on any return would be less than $50 a year either way.

But raising taxes, even marginally, on single taxpayers was unacceptable to lawmakers. Instead, Rep. Dan Mader, R-Lewiston, proposed to phase out the discrepancy of $1,300 by simply raising the married standard deduction to the single taxpayer level over several years.

In an effort to compromise, the start of the phase-in was put off until the 1999 tax year. The Senate’s top leaders and financial chairmen said that only puts off taking millions more dollars out of a state revenue stream that already is inadequate to meet demands for schools, prisons and other programs.