Last year Arizona left Utah in the dust by passing a tax cut over nine times bigger than ours (worth $1.9 billion versus $210 million in the last year alone). Now, Utah’s neighbor to the north, Idaho, has also shown what it is like to lead the pack. The Utah Taxpayers Association urges Utah’s leaders to follow their lead.
Governor Brad Little, the Republican Governor of Idaho called the Legislature into a special session on September 1st to pass major tax relief for the taxpayers of Idaho as they strain under the pressure of inflation. Similar to Utah’s massive revenue surplus that we pointed out in our August newsletter, Idaho is forecasted to have a $2 billion surplus in tax revenue. But they intend to give it back.
The bill, RS29902, will provide:
- A permanent income tax rate cut lowering the income tax rate to a flat rate of 5.8%.
- A $500 million one-time tax rebate for taxpayers based on their 2020 tax filing. It will be based on 10% of tax paid or $600 per joint filer ($300 for individual), regardless of whether or not income tax was paid. Almost all Idaho residents will receive this benefit, with the exception of prison inmates, tourists or non-citizens.
- Boosts direct education funding by $410 million annually from sales tax revenue into their income tax fund for public education. This is in addition to increasing state education funding by $997 million over the past two years.
After the bill was passed, Governor Little said in a statement, “Returning the people’s money is the right thing to do.” One of the bill’s sponsors, Representative Steve Harris, said during the presentation of the bill, “From my point of view, we have a boatload of money that needs to be dealt with appropriately”. Utah finds itself in the exact same situation- swimming in excess revenue.
In addition to Idaho, many states around the country are cutting income tax rates and providing one-time tax rebates. In Missouri, Republican Governor Mike Parson actually vetoed the legislature’s plan to provide a one-time $500 million tax rebate and instead forced them to move towards a larger, $700 million permanent income tax rate cut. That will likely pass in the near future. Montana is now considering a special session to look at tax cuts as well.
Utah needs to follow the lead being set by Idaho and provide meaningful tax relief for taxpayers. Like Idaho, we have plenty of revenue surplus to do it and still provide a meaningful boost to education funding at the same time.