I have in on good authority that that amendment
vote looked like 25-10. No
mention of who the "good guys" were - but we
need to ask hard questions when
our Senators come home!
Senator Thorne arose as sponsor of the bill and opened the debate. The question being, "Shall the bill pass?"
Moved by Senator Cameron, seconded by Senator Stegner, that H
802 be referred to the
Fourteenth Order of Business for amendment.
The question being, "Shall the motion prevail?"
The motion prevailed. H-802 was amended by standing vote.
The question being "Shall the bill pass?"
Roll call vote was requested by Senators Hawkins,
Cameron, and Parry.
Roll call resulted as follows:
AYES--Boatright, Cameron, Crow,
Danielson, Davis, Deide, Dunklin, King-Barrutia,
McLaughlin, Noh, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Wheeler,
Whitworth. Total - 19.
NAYS--Andreason, Bunderson, Burtenshaw,
Darrington, Frasure, Geddes, Hawkins, Ingram,
Ipsen, Keough, Lee, Parry, Richardson, Thorne, Walton (Branch), Williams.
Total - 16.
Total - 35.
Whereupon the President declared that the motion had prevailed and H
802 was referred to the
Fourteenth Order of Business, General
Calendar.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
APRIL 4, 2000
Senators slam door
on House tax cut
By Gene Fadness
Post Register- Idaho Falls
BOISE - In a move certain to infuriate their colleagues in the House,
the state Senate has
for the second time rejected a compromise tax cut proposal.
By a 19-16 vote, senators said the $28.9 million House-passed tax cut
is too much given
an unpredictable economy and a pending decision in the school-facilities
lawsuit.
Senators will amend the House bill today to remove or modify what they
find most
objectionable: a one-tenth of 1 percent reduction in the income tax
rate, which would cost
the state $12.5 million.
The tax cut proposal has become the session's defining legislation,
undergoing several
changes with more to come today, extending one of the longest sessions
in legislative
history.
Looking at budget surpluses nearing $70 million at midsession, House
tax-cutters,
including eastern Idaho Reps. Dennis Lake, R-Blackfoot, and Lee Gagner,
R-Idaho
Falls, were originally talking about cuts approaching $50 million.
The proposal they
eventually introduced was for $41 million.
But the Senate rejected that, proposing $17 million.
Then a conference committee of both House and Senate members was created
to work a
compromise, a rare occurrence in the Idaho Legislature. After a day
of talks, the
committee disbanded, unable to agree.
The House returned with a $28.9 million proposal, but a majority of
the Senate, after a
more than two-hour debate lasting well into Monday evening, refused
to budge on its $17
million proposal.
Senators argued the amount of the cut to most families - between $10
and $30 - isn't
worth the risk of possible budget shortfalls, or worse, a tax increase
next year.
Sen. Dean Cameron, R-Rupert, parted ways with the more conservative
wing of the
Senate he usually votes with and led debate against the House bill.
Cameron, who will likely move into the co-chairmanship of the combined
House and
Senate budget-writing committee next year, doesn't want to face a budget
that doesn't
have the money to pay for tax cuts granted this year, he said.
"I can't tell you what the interest rates a year and a half from now
will be and neither can
you," he told senators. The same goes for the stock market and commodity
prices, which
are still at record lows in rural parts of the state not enjoying the
same prosperity as the
cities, he said.
The current co-chairman of the budget committee disagreed with his likely successor.
"We have the money and this plan will work," said Sen. Atwell Parry,
R-Melba. "If we
don't do it now, when? If not us, who?" Parry asked.
Sen. Stan Hawkins, R-Ucon, arguing for the House tax cut, said he has
a more optimistic
outlook about the state's economic future.
Hawkins got the best offer he has had in years on his calves, from fellow
senator Don
Burtenshaw, R-Terreton.
"Even ag is picking up, and the high-tech economy will have a banner
year this year,"
Hawkins said. The state would have to register below a 4.2 percent
growth rate to not
have enough money for the tax cut and that's happened only twice in
the last decade,
Hawkins said.
Other senators worried allowing the larger tax cut and no money set
aside for badly
needed school building repairs won't look good as a judge this week
considers a lawsuit
filed by 15 Idaho school districts. The districts allege the state
isn't doing enough to
provide a safe learning environment.
The money is there to help schools and grant the House tax cut, said
Sen. Bob Lee,
R-Rexburg. Legislators have already set up a $50 million commercial
revolving loan fund
for schools and still have the money for a $10 million state loan fund,
Lee said. "It seems
to me we've done enough."
Some senators said their constituents might be insulted by a tax cut
that for a family with
$20,000 taxable income would amount to $8.32.
"Everyone said, 'Keep the money here and do what's right,' " said Cameron.
But senators arguing for the tax cut said that their constituents gave
them different
advice.
"They said, 'Let's get some tax relief now. Let's get money in our pockets
now. Because
if we leave it with you, you guys will spend it,' " said Sen. Hal Bunderson,
R-Boise.
Sen. Evan Frasure, R-Pocatello, urged senators to accept the compromise
or risk being
rebuffed completely by the House.
"What we're doing is sending back to the House what has already been
rejected,"
Frasure said. "You're putting in jeopardy the entire tax cut package."
Politics and government reporter Gene Fadness can be reached in Boise
at 336-6436, or
via e-mail at gfadness@idahonews.com.
How they voted
Here's how senators voted on a motion to reject the House-passed $28.9
million tax cut
and send it back for amendments.
A "yes" vote was a vote to reject the House-passed
bill and amend it for a smaller tax
cut. A "no" vote would have let the House
bill stand.
YES (19) Boatright, Cameron, Crow, Danielson, DAVIS, Deide, Dunklin,
King-Barrutia,
McLaughlin, Noh, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett,
Wheeler, Whitworth.
NO (16) Andreason, Bunderson, BURTENSHAW, Darrington, Frasure, Geddes,
HAWKINS, Ingram, Ipsen, Keough, LEE, Parry, RICHARDSON, Thorne,
Walton(voting for Branch), WILLIAMS.
What's in it
Here are the components, which add up to $28,950,000, of the House-proposed
tax cut.
Senators liked all the bill's components except
for the income tax rate reduction.
1) Allow self-employed Idahoans to deduct health insurance. Cost, $1.6 million.
2) Elimination of marriage tax penalty. Cost, $10,600,000.
3) Reduce the individual income tax rate by one-tenth of 1 percent. Cost, $12,500,000.
4) Adjust income tax brackets for inflation. Cost, $2,150,000.
5) Increase the investment tax increase for business. Cost, $2,100,000.
Overall trim in Idaho income tax could die today
By Bob Fick
The Associated Press
Statesman-Boise
Only hours after its tax committee narrowly endorsed the bill, the full
Senate late Monday sidetracked the House-passed $29 million
election-year tax cut, threatening to thwart any quick adjournment of
the 2000 session.
The Senate’s 19-16 vote cleared the way for a decision
today to strip
from the tax bill a $12.5 million, one-tenth of 1 percentage point,
reduction in the income tax rates, which critics say would benefit only
Idaho’s wealthiest residents.
Instead, opponents said, the money should be used
for school facilities
or other programs on which the frenzy for a tax cut caused legislative
budget writers to pinch pennies in a year of huge cash surpluses.
“I have great fear that we are actually setting ourselves up for a future
tax increase,” Finance Committee Vice Chairman Dean
Cameron of
Rupert said.
The cornerstone of the bill’s reduction in tax rates
would lower the
highest rate— charged on joint returns of more than $40,000 taxable
income — from 8.2 percent to 8.1 percent. The lowest rate — charged
on joint incomes of $2,000 or less — would dip from 2 percent to
1.9
percent.
The bulk of the $12.5 million in savings thus would go to the
wealthiest. (?)
A family of four earning the average annual wage
of $27,650 and
taking the standard deduction would save $11 under the House plan.
Components of the bill acceptable to both the House and Senate
include abolition of the so-called marriage penalty,
which will save
about 150,000 couples $104 a year. Both also
back increasing the
credit for business investments made by expanding companies
such
as Micron Technology and giving self employed people full tax
deductibility for their health insurance premiums.
The House plan was billed as compromise between the $41 million
proposal it offered several weeks ago and the $17 million counteroffer
made by the Senate.
While a decision on whether to modify the bill will not be made until
today,
(they
voted to amend, and make the cut for 1 year, with a review next year to
raise taxes again)
the procedural vote setting up the possibility indicated that the
change in tax rates would be deleted from the House bill. The
remnants of the House plan would total about $16.5 million.
House Taxation and Revenue Chairwoman Dolores Crow of Nampa
remained adamant about the requirement for some form of marked
reduction in the income tax.
Eliminating that element, she warned, “would be serious.
It would put it
in jeopardy.”
It also probably would lengthen the session that leaders had been
hoping to wrap up today or Wednesday.
Skeptics of the House plan agreed with its advocates that there could
be a tax cut, but they objected to the size despite Finance Committee
Chairman Atwell Parry’s declaration, “We have the
money, and this
plan will work.”
Gov. Dirk Kempthorne also has raised questions about the size of the
House tax cut, although he had not threatened a veto.
The earlier 5-4 vote in support of the bill by the Senate tax committee
came as stiff opposition to the larger total seemed to be lessening in
the Senate.
While it would be the first state tax cut in more than two decades, any
tax cut approved this spring would be the second major tax change
lawmakers have passed in the past six years. The
Legislature voted
for the state to take over a fourth of the basic school district property
taxes in 1995. The bill general taxpayers have picked up for that break
has risen from $40 million the first year, to $61.5 million
in the 2000
property tax year. Business pays 70 percent of property taxes in
Idaho.
*********************
The tax-cut “train wreck” promised by House and Senate leadership happened Tuesday morning, when the Senate eviscerated the House GOP’s $41 million relief package. The Senate cut more than half of the income-tax credit that was the proposal’s centerpiece and replaced it with a more modest change to adjust tax brackets with inflation.
The move was expected, and well-supported in the Senate; President Pro
Tem Bob Geddes
and just seven others opposed the amendment. With the changes,
the bill would provide a much scaled-back tax-relief package, including
an ongoing $14.7 million in relief starting this year and an additional
$2.15 million starting in 2001.
The tax-cut issue has dominated the Legislature since a coalition of
House GOP members brought it up nearly two months ago, when it appeared
the state might have as much as $70 million in extra
revenue.
A forceful contingent of lawmakers has pushed hard for the income-tax credit while others, including many in leadership, have worried about a myriad of budgeting questions, including how to help Idaho school districts make badly needed schoolhouse repairs and how to settle a huge lawsuit recently won by the interstate trucking industry.
Senate Majority Leader Jim Risch, R-Boise, opposed the largest portion
of the tax cut and led the floor fight to amend it.
“We believe that House Bill 707, when we’re done with it here,
is going to be a good bill, a fair bill, and does what needs to be done,”
Risch said.
But the House, which passed the bill earlier this month, is expected to oppose the changes. Lawmakers in both houses have dusted off the rule books that detail protocol for convening the rarely used conference committee, which will try to reach an agreement.
“I’m not surprised, but very disappointed,” said Rep. Dolores Crow, the Nampa Republican who sponsored the original bill with budget committee co-chairman Rep. Bob Geddes and a coalition of House GOP members.
The Senate has been wary of the cut since the House introduced it weeks ago. The lawmakers have been concerned the money will be needed to deal with the ongoing lawsuit on school facilities funding and the recent court decision finding Idaho responsible for years of unfair truck fees.
Risch’s action Tuesday was marred by a technical error in an amendment.
The Senate decided to replace a 3 percent income-tax credit worth $26.7
million with a $2.15 million system to adjust personal tax brackets as
inflation and the cost of living increase. As written, the amendment would
cut taxes six times more than Risch intended. He said Tuesday evening that
he hoped to fix the problem on the Senate floor today.
Ucon Republican Sen. Stan Hawkins and Senate Education Committee chairman
Gary Schroeder blasted the amending process.Schroeder said the major change
was a “hijacking” of the bill. Though Schroeder himself proposed a failed
amendment to kill the bill outright, he criticized the Senate for deciding
on the new income tax scheme without a public hearing on the idea.
Schroeder also opposed a section of the bill that enhances the tax
credits businesses can get when they invest in equipment and expansion
in Idaho. “Let’s get real here,” he said. “We all know where a big portion
of this tax credit is going, and it’s not going to the small-business man.”But
Nampa GOP Sen. Jerry Thorne and others defended the tax credit, and a new
enhancement the Senate tagged on Tuesday. “This is one way big business
can benefit and corporations can benefit and then pass on the savings to
their employees,” Thorne said.
The new tax cut
Amendments made on the Senate floor Tuesday morning drastically
changed a House-proposed $41 million tax cut, reducing the overall
impact to $14.7 million this year and almost $17 million in 2001.
Here’s a look at what was added, what was dropped and how House
Bill 707 stands now. The Senate:
Kept
-- Fully deductible health insurance: Allows Idaho’s self-employed to
deduct the full costs of their health insurance premiums. Cost: $1.6
million
-- Repealed marriage tax: Removes any additional penalty for married
couples filing jointly. Cost: $10.8 million
-- Enhanced investment tax credit: Restores a higher credit dropped a
few years ago. It raises the tax savings for companies that spend
money on equipment or expansions in Idaho. Cost: $2.1 million
Added
-- Further boosted investment tax credit: This doubles the number of
years in which a company can claim the investment credit. Businesses
will be able to spread the credit over 14 years. Cost: $200,000
-- Inflation-adjusted taxable income: This would keep inflationary and
cost-of-living raises from moving a family into a higher tax bracket.
Unlike the other provisions, which would start this year, the indexing
would begin in 2001. The amendment approved was technically
flawed, and the Senate plans to act on a fixed version today. Cost:
$2.15 million
Dropped
-- 3 percent credit for income-tax payers: This would have provided a
credit on every Idaho income tax return. Cost: $26.7 million
The Senate vote
Changes to H707 were made in the Senate’s amending orders.
Senate rules allow amendments to be approved or denied by a voice
vote. If a senator requests it, the body may vote through a “division,”
in
which an amendment's supporters and opponents stand up to be
counted. The members’ votes are not officially recorded, however.
Here’s how the several amendments to H707 were decided on
Tuesday morning (local legislators names are in bold):
-- To delete the 3 percent income-tax credit:
Moved by Senate Majority Leader Jim Risch, R-Boise, seconded by
Assistant Majority Leader John Sandy, R-Hagerman. A division showed
a majority favored the amendment.
Opposing it were Sens. Bob Geddes, R-Soda Springs; Evan Frasure,
R-Pocatello; Hal Bunderson, R-Meridian; Jerry Thorne, R-Nampa; Ric
Branch, R-Midvale; John Andreason, R-Boise; and Mel Richardson,
R-Idaho Falls.
-- To eliminate the enacting clause, killing the whole bill:
Moved by Sen. Gary Schroeder, R-Moscow, seconded by Sen. Betsy
Dunklin, D-Boise. A division showed a majority opposed the
amendment.
Supporting it were Schroeder, Dunklin and Sens. Lin Whitworth,
D-Inkom, and Clint Stennett, D-Ketchum.
-- To eliminate the enhanced investment tax credit:
Moved by Schroeder, seconded by Sen. Ralph “Moon” Wheeler,
R-American Falls. A voice vote showed a majority opposed the
amendment.
-- To add inflation-adjustments to tax brackets:
Moved by Risch, seconded by Sandy. A division showed a majority
favored the amendment. Only Schroeder rose to oppose it.
-- To further enhance the investment tax credit:
Moved by Thorne, seconded by Sen. Dean Cameron, R-Rupert. A
division showed a majority favored the amendment.
Opposing it were Sen. Laird Noh, R-Kimberly; and Sens. Jack Riggs,
R-Coeur d’Alene; and Stanley Williams, R-Pingree.
What’s next
The Senate will vote on the amended bill this week. If House members
do not concur with the amendments, House Speaker Bruce Newcomb
and Senate President Pro Tem Bob Geddes will name a joint
conference committee to hash out a compromise.
The committee’s report will then have to be agreed upon in both
chambers.
```````````````````````````````````````````````````````````````````````````````````````````````
H-707..............................................by
REVENUE AND TAXATION
INCOME TAX - CREDIT
- Adds to, amends and repeals existing law to provide
an income tax deduction for a self-employed taxpayer for the cost of
medical insurance for the taxpayer, spouse and dependents; to provide
an
income tax credit, for tax years 2000 and after, of three percent of
the
taxpayer's state income tax liability; to exclude from the calculation
of
Idaho taxable income any marriage penalty that may exist in the basic
standard deduction; to provide for adjustments; and to increase the
maximum
amount of the allowable tax credit of the investment tax credit.
03/01 House intro - 1st rdg - to printing
03/02 Rpt prt - to Rev/Tax
03/07 Rpt out - rec d/p - to 2nd rdg
03/08 2nd rdg - to 3rd rdg
03/09 3rd rdg - PASSED - 41-29-0
AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell,
Callister,
Campbell, Cheirrett, Crow, Denney, Ellsworth,
Field(13), Field(20),
Gagner, Geddes, Gould, Hadley, Hammond,
Hansen(23), Hornbeck,
Kellogg, Kendell, Kunz, Lake, Linford,
Loertscher, McKague,
Mortensen, Moss, Moyle, Pearce, Pischner,
Reynolds, Sali, Schaefer,
Smylie, Stevenson, Taylor, Wheeler,
Wood, Zimmermann, Mr Speaker
NAYS -- Bieter, Black, Boe, Bruneel, Chase, Clark, Cuddy,
Deal,
Hansen(29), Henbest, Jaquet, Jones,
Judd, Kempton, Mader, Marley,
Meyer, Montgomery, Pomeroy, Ridinger,
Ringo, Robison, Sellman,
Shepherd, Smith, Stoicheff, Stone, Tilman,
Trail
Absent and excused -- None
Floor Sponsor - Crow, Moyle, Gagner, Lake
Title apvd - to Senate
03/10 Senate intro - 1st rdg - to Loc Gov
Bill Text
H0707
||||
LEGISLATURE OF THE STATE OF IDAHO
||||
Fifty-fifth Legislature
Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 707
BY REVENUE AND TAXATION COMMITTEE
1
AN ACT
2 RELATING TO INCOME TAX POLICIES; AMENDING
CHAPTER 30, TITLE 63, IDAHO CODE, BY
3 THE ADDITION OF
A NEW SECTION 63-3022O, IDAHO CODE, TO PROVIDE AN INCOME
4 TAX DEDUCTION
FOR A TAXPAYER WHO IS A SELF-EMPLOYED INDIVIDUAL TREATED AS
5 AN EMPLOYEE PURSUANT
TO SECTION 401(c)(1) OF THE INTERNAL REVENUE CODE, AN
6 AMOUNT EQUAL TO
THE AMOUNT PAID BY THE TAXPAYER DURING THE TAXABLE YEAR
7 FOR INSURANCE
WHICH CONSTITUTES MEDICAL CARE FOR THE TAXPAYER AND THE
8 SPOUSE AND DEPENDENTS
OF THE TAXPAYER WHICH IS NOT OTHERWISE DEDUCTIBLE BY
9 THE TAXPAYER FOR
FEDERAL INCOME TAX PURPOSES BECAUSE THE APPLICABLE PER-
10 CENTAGE FOR
THAT TAXABLE YEAR AS SPECIFIED PURSUANT TO SECTION 162(1) OF
11 THE INTERNAL REVENUE
CODE IS LESS THAN ONE HUNDRED PERCENT; AMENDING CHAP-
12 TER 30, TITLE 63,
IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3022P,
13 IDAHO CODE,
TO PROVIDE AN INCOME TAX CREDIT FOR TAX YEAR 2000 AND BEYOND
14 OF THREE PERCENT
OF THE TAXPAYER'S STATE INCOME TAX LIABILITY; REPEALING
15 SECTION 63-3022N,
IDAHO CODE; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE,
16 BY THE ADDITION
OF A NEW SECTION 63-3022N, IDAHO CODE, TO PROVIDE FOR THE
17 ELIMINATION FROM
THE CALCULATION OF IDAHO TAXABLE INCOME ANY MARRIAGE PEN-
18 ALTY THAT MAY EXIST
IN THE BASIC STANDARD DEDUCTION PROVIDED IN THE INTER-
19 NAL REVENUE
CODE, TO PROVIDE FOR ADJUSTMENTS, TO PROVIDE A DEFINITION OF
20 "THE MARRIAGE
PENALTY" AND TO PROVIDE PROCEDURES; AMENDING
SECTION
21 63-3029B, IDAHO
CODE, TO INCREASE THE MAXIMUM AMOUNT OF THE ALLOWABLE TAX
22 CREDIT OF
THE INVESTMENT TAX CREDIT AND TO MAKE TECHNICAL CORRECTIONS;
23 DECLARING AN EMERGENCY
AND PROVIDING RETROACTIVE APPLICATION.
24 Be It Enacted by the Legislature of the
State of Idaho:
25 SECTION 1.
That Chapter 30, Title 63, Idaho Code, be, and the same
is
26 hereby amended by the addition thereto
of a NEW SECTION, to be known and des-
27 ignated as Section 63-3022O, Idaho Code,
and to read as follows:
28 63-3022O.
HEALTH INSURANCE COSTS. With respect to a taxpayer who
is a
29 self-employed individual treated as
an employee pursuant to section 401(c)(1)
30 of the Internal Revenue Code, an amount
equal to the amount paid by the tax-
31 payer during the taxable
year for insurance, which constitutes medical care
32 for the taxpayer and the spouse and dependents
of the taxpayer which is not
33 otherwise deductible by the
taxpayer for federal income tax purposes because
34 the applicable percentage for that taxable
year as specified pursuant to sec-
35 tion 162(1) of the
Internal Revenue Code is less than one hundred percent
36 (100%), shall be allowed as a deduction
against taxable income.
37 SECTION 2.
That Chapter 30, Title 63, Idaho Code, be, and the same
is
38 hereby amended by the addition thereto
of a NEW SECTION, to be known and des-
39 ignated as Section 63-3022P, Idaho Code,
and to read as follows:
40 63-3022P.
INCOME TAX CREDIT FOR TAX YEARS 2000 AND BEYOND. AMENDED
OUT For tax years
41 on and after 2000, there shall be allowed
a credit equal to three percent (3%)
2
1 of the taxpayer's income tax liability for
the tax year as computed by section
2 63-3024, Idaho Code.
3 SECTION 3.
That Section 63-3022N, Idaho Code, be, and the same is hereby
4 repealed.
5 SECTION 4.
That Chapter 30, Title 63, Idaho Code, be, and the same
is
6 hereby amended by the addition thereto
of a NEW SECTION, to be known and des-
7 ignated as Section 63-3022N, Idaho Code,
and to read as follows:
8 63-3022N.
MARRIAGE PENALTY ADJUSTMENT. (1) To eliminate from the calcula-
9 tion of Idaho taxable income any marriage
penalty that may exist in the basic
10 standard deductions provided in the Internal
Revenue Code, basic federal stan-
11 dard deductions shall be adjusted as provided
in this section.
12 (2) As
used in this section, "the marriage penalty" means the difference
13 obtained by subtracting:
14 (a) The basic
standard deduction for joint returns, from
15 (b) Two (2)
times the basic standard deduction for an individual who is
16 not married and
who is not a surviving spouse or head of household.
17 (3) For
each taxable year beginning on and after January 1, 2000,
the
18 standard deduction in section 63-3022(k)(1),
Idaho Code, shall be: on a joint
19 return, the basic federal joint standard
deduction plus the marriage penalty,
20 rounded to the nearest dollar, plus the
amount of any additional standard
21 deduction for the aged or blind for which
a taxpayer may qualify under section
22 63 of the Internal Revenue Code.
23 (4) The
basic federal standard deduction for an individual for
whom a
24 deduction under section 151 of the
Internal Revenue Code is allowable to
25 another taxpayer shall not be
reduced below the minimum adjusted basic stan-
26 dard deduction provided by section 63 of
the Internal Revenue Code.
27 SECTION 5.
That Section 63-3029B, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 63-3029B.
INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
30 of the taxpayer there shall be allowed,
subject to the applicable limitations
31 provided herein as a
credit against the income tax imposed by chapter 30,
32 title 63, Idaho Code, an amount equal to
the sum of:
33 (a) tThe tax
credit carry-overs carryovers; and
34 (b) tThe tax
credit for the taxable year.
35 (2) The maximum
allowable amount of the credit for the current taxable
36 year shall be three percent
(3%) of the amount of qualified investments made
37 during the taxable year.
38 (3) As used
in this section "qualified investment" means certain depre-
39 ciable property which:
40 (a) iIs
eligible for the federal investment tax credit, as defined
in
41 sections 46(c) and
48 of the iInternal rRevenue cCode subject to the limi-
42 tations provided
for certain regulated companies in section 46(f) of the
43 iInternal
rRevenue cCode and is not a motor vehicle under eight thousand
44 (8,000) pounds gross
weight;
45 (b) iIs acquired,
constructed, reconstructed, erected or placed into ser-
46 vice after December
31, 1981; and
47 (c) hHas a
situs in Idaho.
48 (4) Notwithstanding
the provisions of subsections (1) and (2) of this
49 section, the amount of
the credit allowed shall not exceed forty-five fifty
50 percent (450%) of the tax liability of the
taxpayer.
3
1 (5) If the
sum of credit carry-overs carryovers from the credit allowed
2 by subsection (2) of
this section and the amount of credit for the taxable
3 year from the credit allowed by subsection
(2) of this section exceed the lim-
4 itation imposed by subsection (4) of this
section for the current taxable
5 year, the excess attributable to the current
taxable year's credit shall be an
6 investment credit carry-over
carryover to the seven (7) succeeding taxable
7 years. In the case of a group of corporations
filing a combined report under
8 section 63-3027, Idaho
Code, or sections 63-3027B through 63-3027E, Idaho
9 Code, credit earned by one (1) member of
the group but not used by that member
10 may be used by another member of the group,
subject to the provisions of sub-
11 section (4) of this
section, instead of carried over. The entire amount of
12 unused credit shall be carried forward
to the earliest of the succeeding
13 years, wherein the oldest available unused
credit shall be used first, so long
14 as the qualified investment
property for which the unused credit was granted
15 still maintains Idaho situs. For a combined
group of corporations, credit car-
16 ried forward may be claimed by any member
of the group unless the member who
17 earned the credit is no longer included
in the combined group.
18 (6) Any recapture
of the credit allowed by subsection (2) of this section
19 on property disposed of or ceasing
to qualify, prior to the close of its use-
20 ful life, shall be determined according
to the applicable recapture provisions
21 of the iInternal rRevenue cCode. In the
case of a unitary group of corpora-
22 tions, the increase in tax due to
the recapture of investment tax credit must
23 be reported by the member of the group who
earned the credit regardless of
24 which member claimed the credit against
tax.
25 (7) For
the purpose of determining whether property placed in service is
26 a "qualified investment" as defined in subsection
(3) of this section, the
27 provisions of section 49 of the iInternal
rRevenue cCode shall be disregarded.
28 (8) For
purposes of this section, property has a situs in Idaho during a
29 taxable year if it is used in Idaho at any
time during the taxable year. Prop-
30 erty not used in Idaho during a taxable
year does not have a situs in Idaho in
31 the taxable year during which the property
is not used in Idaho or in any sub-
32 sequent taxable year. No credit or carry-over
carryover of credit is permitted
33 under this section if the credit or carry-over
carryover relates to property
34 that does not have
a situs in Idaho during the taxable year for which the
35 credit or carry-over carryover is claimed.
The Idaho situs of property must be
36 established by records maintained by the
taxpayer which are created reasonably
37 contemporaneously with the use of the property.
38 (9) In the
case of property used both in and outside Idaho, the taxpayer,
39 electing to claim the credit provided in
this section, must elect to compute
40 the qualified investment
in property with a situs in Idaho for all such
41 investments first qualifying during that
year in one (1), but only one (1), of
42 the following ways:
43 (a) tThe amount
of each qualified investment in a specific asset shall be
44 separately computed
based on the percentage of the actual use of the prop-
45 erty in Idaho by
using a measure of the use, such as total miles or total
46 machine hours, that
most accurately reflects the beneficial use during the
47 taxable year
in which it is first acquired, constructed, reconstructed,
48 erected or placed
into service; provided, that the asset is placed in ser-
49 vice more than ninety
(90) days before the end of the taxable year. In the
50 case of assets acquired,
constructed, reconstructed, erected or placed
51 into service
within ninety (90) days prior to the end of the taxable year
52 in which the investment
first qualifies, the measure of the use of that
53 asset within Idaho
for that year shall be based upon the percentage of use
54 in Idaho during
the first ninety (90) days of use of the asset;
55 (b) tThe
investment in qualified property used both inside and outside
4
1 Idaho during the
taxable year in which it is first acquired, constructed,
2 reconstructed,
erected or placed into service shall be multiplied by the
3 percent of the investment
that would be included in the numerator of the
4 Idaho property
factor determined pursuant to section 63-3027, Idaho Code,
5 for the same year.
6 (10) Only for the
purposes of subsections (3)(a) and (7) of this section,
7 references to sections
of the "iInternal rRevenue cCode" mean the sections
8 referred to as they existed in the iInternal
rRevenue cCode of 1986 prior to
9 November 5, 1990.
10 SECTION 6.
An emergency existing therefor, which emergency
is hereby
11 declared to exist, this act shall
be in full force and effect on and after
12 its passage and approval, and retroactively
to January 1, 2000.
Statement of Purpose / Fiscal Impact
STATEMENT OF PURPOSE
RS10221C1
The purpose of this legislation is to provide
that a self- employed person may
deduct medical insurance premiums from their
state income tax which may not
otherwise be deductible for federal income
tax purposes. Further, this legislation
provides an income tax credit of three percent(3%)for
a taxpayer's state income
tax liability for the tax year 2000 and beyond.
It further provides for elimination
from the calculation of Idaho taxable income
any marriage penalty. This
legislation also increases the maximum amount
of tax liability the investment tax
credit may be.
FISCAL IMPACT
The fiscal impact is projected as follows:
Health Insurance Deduction for Self-Employed
1,600,000
"Marriage Tax Penalty" fully funded
10,788,000
A 3% Individual Income Tax Credit
26,000,000
Investment Tax Credit Increase
2,100,000
Total: $40,448,000
CONTACT: Rep. Dolores Crow
Rep. Mike Moyle
Phone: 208) 332-1000
STATEMENT OF PURPOSE/ FISCAL IMPACT
H 707