Bill to raise child tax credit goes to House floor

Idaho lawmakers passed one of the biggest tax cuts in the state’s history earlier this year, but are looking to tweak the measure to alleviate concerns that it hurts families.

The House Revenue & Taxation Committee unanimously passed a bill Monday, HB 675, to increase the child tax credit from the $130 approved in HB 463 up to $205.

Idaho Gov. Butch Otter signed HB 463, the comprehensive tax bill, into law on Monday.

HB 463 makes changes to state tax code to conform to the federal changes and is expected to reduce state taxes by $104.5 million overall. Two critical changes expected to save most of that are its reduction of business and individual income tax rates by .475 percent, and its new state child tax credit, created to offset the elimination of the dependent exemption at the federal level.

HB 675’s lead sponsor, House Majority Leader Mike Moyle, said it would “make Idaho families whole.”

Though the bill cleared the committee unanimously today, there were questions.

Rep. John Gannon, D-Boise, argued that the problem was HB 463.

“The original problem is that 463 is unfair to Idaho families. It was unfair when it was proposed. It was unfair when it was passed,” Gannon said. “That needs to be readdressed and needs to be changed so that the money taken from the standard deduction … is brought back to the dependent deduction, where it belongs, so that Idahoans are truly beneficiaries of the tax changes that have been made.”

Moyle responded that the problem lies in Idaho’s income tax rates. “Every Idahoan who pays taxes sees a tax reduction in HB 463,” he said. “The problem is that … our high income tax rates hook them with liability … it puts our families and all taxpayers at a disadvantage.”

Minority Leader Mat Erpelding took odds with the new bill because he feared it would hurt state revenues.

Lawmakers also recently passed an internet sales tax bill estimated to bring in an additional $22 million or more annually in taxes, but Erpelding feared companies would say it was hard to enforce.

“I don’t think we’re going to see this huge bump right away from the (internet sales tax) bill that we just passed,” Erpelding said. “That said, again, I appreciate Rep. Moyle trying to get it right, but this is still a really poor way to do fiscal policy.”

HB 675 now heads to the House floor for a vote. If it passes both chambers, it goes to the governor’s desk for his consideration.

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Kyle Pfannenstiel covers the 2018 Idaho Legislature for the University of Idaho McClure Center for Public Policy Research.