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Alternative tax bill killed; Idaho House panel dumps Senate chair’s proposal

UPDATED: Tue., Feb. 20, 2018

An Idaho House panel on Monday killed the Senate tax chairman’s alternative tax-cut bill; it drew only one “yes” vote in the House tax committee.

Senate Tax Chairman Dan Johnson, R-Lewiston, took Gov. Butch Otter’s big House-passed income tax cut bill as a starting point, but made several changes:

Instead of a $130 per child, non-refundable tax credit, it kept the $4,150 dependent exemption that federal changes would otherwise eliminate, thereby boosting the resulting tax cuts for large Idaho families.

To make up the difference, it cut personal and corporate income tax rates by 0.3 percent instead of Otter’s proposed 0.475 percent, and refrained from conforming with one other federal tax change, on a business tax break regarding net operating loss carry-backs.

Johnson said no state has conformed to that change, Idaho would be the first to do so. He called that break “a carve-out with few economic benefits,” and said pass-through business entities already are getting substantial tax breaks.

Johnson estimated that not conforming to that business break would save the state $46.9 million a year, while keeping the dependent exemption would cost the state $139.5 million. All told, his bill offered $193.3 million in total tax relief, with a net impact on the state general fund of $95.9 million.

House Majority Leader Mike Moyle, R-Star, spoke out against the move on the business tax break, saying he didn’t want to “punish those who create the jobs.”

Rep. John Gannon, D-Boise, said, “I think that Sen. Johnson has done a very, very intensive and very good job at trying to put something together that works. The problem for me is this reduction in general fund revenue … considering the tremendous growth that we have.” He said. “It’s going to be real tight.”

Erpelding cast the only “yes” vote for the bill; every other committee member opposed it.

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