GOP Railroad “Reverse Robin Hood” Tax Cut through House

The GOP railroaded a lopsided tax proposal through the House that overwhelmingly benefits profitable corporations and people with the highest incomes.

House Bill 436 passed and now moves to the Senate. All Democrats voted against the legislation, and instead advocated more critical tax solutions, such as reducing property taxes or repealing the sales tax on groceries — both of which would bolster Idaho’s working families or local economies. The income tax cut is in large part funded by internet sales tax, a more regressive form of taxation paid disproportionately by those with lower and middle incomes, creating a reverse Robin Hood effect.

Per the legislation, someone with $1 million in annual taxable income will receive an ongoing yearly tax cut of over $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of about $75. 

Rep. James Ruchti said Idahoans have expressed a clear desire for property tax relief, a repeal of the grocery tax, and adequately funded schools. However, the bill — which has a one-time cost of $350 million in addition to an ongoing cost of $250 million — effectively precludes the state’s ability to eliminate the grocery tax while meeting the other stated funding objectives.

“Idahoans want property tax relief, to be able to feed their families, to have well-funded schools, good paying jobs, and sustainable infrastructure. Nowhere on that list will you find people clamoring for an income tax cut,” Ruchti said. “We need to put dollars in the hands of people who need it most.”

Assistant House Democratic Leader Lauren Necochea said small businesses depend on a strong middle class to thrive, but the legislation does nothing to bolster Idaho’s working families or local economies. Instead, it would reduce the corporate income tax rate from 6.5% to 6%, leaving in place the sales tax rate people pay for food, diapers, medicines, and other needs. 

According to the Idaho State Tax Commission’s Tax Burden Study, Idaho is already below the national average for corporate taxes collected relative to state income, at 1%.

“What we do not need are more tax cuts for profitable corporations. More than 80% of revenue cuts that benefit corporations ultimately flow out of state. That does not build a vibrant Main Street,” Necochea said. “Our political system is seriously broken when the GOP supermajority rams through a bill that voters are asking us to reject.”

House Democratic Leader Ilana Rubel said the bill highlights the legislature’s blatant disregard for the wants and needs of everyday Idahoans.

“This bill literally takes from the poor and gives to the rich at a time when the state has yet to allocate a single penny in the budget toward education, infrastructure or other vital needs. This is not how responsible government should work. Fix the schools, and the bridges and the critical problems first, then consider whether giant tax cuts that overwhelmingly benefit the wealthy and most profitable corporations make sense,” Rubel said. “I want grocery tax repeal, property tax reductions — the tax cuts that help working families meaningfully, that help fixed-income seniors, and that the people of Idaho actually want.”