BOISE — The Idaho Senate passed Gov. Butch Otter’s $200 million tax cut on a 26-9 vote Thursday.
After clearing both chambers, it now heads to Otter’s desk.
HB 463 conforms to federal tax changes in 2018, meaning it would double the standard deduction and eliminate the dependent exemption, among other changes.
The conformity portion is expected to increase taxes by an overall $97.4 million.
To offset that, it cuts income tax rates for individuals and businesses by .475 percent, and it adds a non-refundable child tax credit of $130.
That portion is expected to decrease taxes by a $201.9 million.
Overall, HB 463 is estimated to reduce taxes by nearly $104.5 million.
The Idaho Center for Fiscal Policy estimates the bill would give the middle 20 percent income-earning households a $55 annual tax cut. Meanwhile, they say households in the top one percent will see an over $4,000 tax cut. They also note that Idaho households with children, particularly those with three or more, are likely to experience tax increases.
Boise Democratic Sen. Grant Burgoyne offered an analogy for how he thinks the bill would impact Idahoans.
“If you have 100 million gallons of water to put on your lawn over given periods of time, and you decide to put 71 percent of it on one percent of your lawn. What will happen? Well most of your lawn will turn brown, dry out or die,” he said. “What will happen to the one percent of your lawn with virtually all the water? It will become a swamp. I believe we should drain the swamp.”
Senate Republicans argued the bill would benefit everyone in the long run. Sen. Jim Rice even offered an counter to Burgoyne’s analogy.
“When I was young, we moved to Kuna and we bought five acres. We had a ditch across the front. Every summer, (I) went out to that ditch and put all the water out onto the field. And guess where it went? It went down-hill to the rest of the field,” said Rice, R-Caldwell.
He believes we’re already seeing the benefits from the federal changes.
“We just saw this with the federal tax cuts, as we had announcement after announcement after announcement of higher wages, bonuses (and) capital investments,” Rice said.
All Senate Democrats voted against the measure along with Republican Senators Dan Johnson, R-Lewiston, who chairs the Senate Revenue & Taxation Committee; Shawn Keough, R-Sandpoint, who co-chairs the Joint-Finance Appropriations Committee; and Jeff Siddoway, R-Terreton.
Three weeks ago, the measure passed the House on a party-line vote. Last week, it squeaked through a Senate committee on a narrow 5-4 vote.
Without any more legislative hurdles to clear, besides being signed by Otter, HB 463 is likely to pass.
Kyle Pfannenstiel covers the 2018 Idaho Legislature for the University of Idaho McClure Center for Public Policy Research.