Tax Conformity Has a Bite
By Rep. Ronald Nate – District 34
January 18, 2018
Every year one of the first bills in the Idaho legislature is the Tax Conformity bill. This bill updates Idaho’s tax law making Idahoans’ adjusted gross income (AGI) be the same as is calculated on their federal tax forms. This makes taxes for Idaho very easy to calculate because you just take the AGI from the federal form and use it on your Idaho tax form. Easy peasy.
Conformity in general is efficient for accounting purposes, but in past years I have argued against conformity for two specific reasons: one, when the federal government incorporated same sex marriage into tax code, conformity makes Idaho do the same (in contradiction to the Idaho Constitution); and two, any changes in tax law at the federal level automatically impact Idaho taxes—in effect, we allow the federal government to write state tax law.
This year, issue number two hits Idaho hard. The federal tax reform (President Trump’s big tax bill) passed this December is a big tax reduction for federal taxpayers. The Trump tax cut is a huge bonus for taxpayers; it was long overdue and it will be great for the economy. But, because the tax reform eliminates the personal and dependent exemptions from AGI, our tax conformity makes it result in a significant TAX INCREASE for Idaho state income tax payers. Idahoans will see a $97.4 million increase in their state income taxes with the Tax Conformity bill.
Literally, the federal tax reduction bill, through conformity, writes a tax increase into our state income tax laws. We owe it to Idaho taxpayers to cut taxes to both offset the conformity and to return the other large unexpected tax collections which are rightfully theirs—see the next section.
Idaho Capitol Swamped with Your Tax Dollars
Latest estimates have tax collections in Idaho for fiscal year 2018 to be at least $300 million ahead of projections. That’s right, way more money is flooding into the capitol than even the financial experts expected. Combine this with the unexpected tax collections from Idaho conformity to the federal tax code (see above), and by year’s end taxpayers will have sent in more than $400 million beyond expectations.
This is not new. For the past several years, more taxes have come in than was expected (over $200 million last year). In 2018, we need to break the trend of spending up the excess and even borrowing at times. Fiscal conservatism is a thing.
It is time for serious TAX RELIEF. Last year the Governor vetoed the grocery tax repeal after the session ended. There is enough support to overturn a veto should he try that again. A full 59% of Idahoans support the repeal of the grocery tax, according to a recent poll by BSU Public Surveys. Another 28% support income tax reductions. We can, and should, do both. The Idaho Government does not need this extra money. Let your legislators know who this money rightfully belongs to, and how it should be returned to the hardworking families in Idaho who earned it.
Economics Worlds Collide
For me, being an economics teacher is fun. One reason is, well, its economics—practically synonymous with fun. Another reason is I get to teach and work with some amazing students. This session, I get the extra bonus of seeing and working with one of my star economics students. She is Emma Schwarze, and she is working in the Capitol as an intern for Veritas Advisors during the 2018 Legislative Session. They are lucky to have her on board and she’s doing a great job! Here we are enjoying a morning in the Revenue and Taxation Committee.
Growing Freedom – Get Involved!
Please visit the Growing Freedom Idaho website to help all citizens be more involved with what is going on in the Idaho Legislature and how to effectively make their voices heard. The site includes a Freedom Agenda of legislation brought to the legislature by citizens and is what liberty minded legislators are pursuing this session.
Stay in Touch!
As always my goals are to best represent District 34’s views and interests, keep my oath to protect and defend the U.S. and State Constitutions, restrain government influence, keep taxes low, and support legislation that is constitutional, economical, and moral. I always appreciate feedback from voters and citizens. As you probably know, citizen input is very important and influential. When you and others contact legislators, they have the power and incentives to protect rights and keep their oaths. Together, we can keep Idaho great and free.
You and your friends can contact your legislators to make your views known by emailing or calling them. To find your representatives’ and senators’ contact information you can click here for representatives, and here for senators.
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