The bill, which later passed the House, increases the grocery tax credit by $20 per person starting in the 2023 tax year. The motion sought to amend the legislation to instead repeal the grocery tax versus increasing the credit. Democrats have advocated for eliminating the sales tax on groceries throughout the 2022 session, since it would help Idaho’s working families each time they shop.

“We have been saying all along that if the legislature pushed $600 million out the door for corporate and income tax cuts benefiting the wealthy, we would not have dollars available for meaningful tax solutions that benefit working Idahoans. House Bill 509 illustrates this exact result: all the legislature can now do is promise a modest benefit for regular Idahoans two years from now,” Asst. House Democratic Leader Lauren Necochea said. 

The proposed increase to the grocery tax credit is modest, and doesn’t fully account for inflation that has occurred since the credit was last updated and the expected inflation that will occur before the bill takes effect, Necochea said. Idahoans wouldn’t receive the benefit until they file taxes in 2024. If the state is going to promise this future benefit to Idahoans, Democrats have stressed the need for a bolder proposal providing meaningful aid.

“The House GOP has an ongoing pattern of providing huge tax breaks for people at the top, and only after their priorities are brought to light, throwing occasional bread crumbs to working Idahoans,” House Democratic Caucus Chair Sally Toone said. “Our people need help. We receive calls and emails from constituents daily asking us to repeal the grocery tax. As lawmakers, we have a duty to listen to the people of Idaho, but the majority party isn’t doing that. House Bill 509 isn’t nearly enough. Our working families deserve real help.”

“We need inflation relief now. At 9%, Idaho is a hotspot for inflation and Idahoans need inflation relief, not $20 two years from now,” Rep. John Gannon said. “We also need to address the homeowners exemption and quit borrowing and spending money. Policies need to change.”

Rep. Lauren Necochea

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.

Rep. James Ruchti

“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%.

Rep. Ilana Rubel

“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.”

Rep. Lauren Necochea

The House Revenue and Taxation Committee forwarded House Bill 436 to the full body in a party-line vote following the public hearing. Every constituent who testified spoke against the bill; only lobbyists were in favor.

Per the legislation, someone with $1 million in annual taxable income will receive an ongoing yearly tax cut of $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of $75. The bill also reduces the corporate income tax rate from 6.5% to 6%, matching the sales tax rate people pay for food, diapers, medicines, and other needs. 

Assistant House Democratic Leader Lauren Necochea spoke against the costly legislation in committee, and said if passed, the bill will gobble up dollars that should be used for more critical tax solutions, such as reducing property taxes or repealing the sales tax on groceries. She added that it does nothing to bolster Idaho’s working families or local economies.

“The priorities of GOP legislators are upside down when they want to send $8,000 checks to households in the top 1% and $75 to Idahoans who work for modest wages,” Necochea said. “We need more dollars in the hands of working Idahoans who power our local economies when they buy groceries, get an oil change, or have their hair cut.”

Rep. James Ruchti

Her comments were echoed by Rep. James Ruchti, who also expressed concern that once the legislature decides to commit funds toward another income tax cut, there would be no money available to address the real needs of Idahoans.

Both said they haven’t been contacted by a single constituent asking for income tax cuts, but many have asked for repealing the grocery tax, meaningful property tax relief, well-funded schools, and sustainable infrastructure.

“It’s clear; this is not the tax bill Idahoans want. Idahoans are very clear that they want property tax solutions and a repeal of the sales tax on groceries. No one is asking for income tax or corporate tax cuts,” Ruchti said. “This year, we have the opportunity to be creative and really invest in our working families. This proposal only leaves them further behind.”

According to the Idaho State Tax Commission’s Tax Burden Study, Idaho ranks 18th for corporate taxes collected relative to state income, at 1% below the national average.

The proposed one-time tax rebate increases with income level, so the higher one’s income is, the more money they will receive. The ongoing revenue cuts also direct the largest benefits to the top of the income spectrum. Someone with $1,000,000 in annual taxable income will receive an ongoing yearly tax cut of $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of $75.

“This costly legislation will take other opportunities off the table such as reducing property taxes or repealing the grocery tax. Every major tax bill in Idaho for at least the last decade has prioritized profitable corporations and the wealthy,” Rep. Lauren Necochea said. “We have an opportunity this year to prioritize working Idahoans and bolster our middle class. I’m extremely disappointed to see that squandered with more of the trickle-down approach.”

“In my district, I simply don’t hear my constituents complaining about their income taxes being too high. But I do hear frequent complaints about property taxes being too high. That is the problem my constituents want fixed,” Rep. James Ruchti added.