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Federal tax conformity bill to the House floor

'If you have a dependent, you’re going to end up paying more...'

Idaho Tax Commission Tax Policy Specialist Tom Shaner presenting the bill’s fiscal impact Jan. 19.

Credit: Kyle Pfannenstiel
Idaho Tax Commission Tax Policy Specialist Tom Shaner presenting the bill’s fiscal impact Jan. 19.

— A bill to conform to federal definitions of income for tax purposes in Idaho will be heard on the House of Representatives Floor.

The federal conformity bill, H.B. 355, was approved by the House Revenue & Taxation Committee Friday, Jan. 19, with a sole dissenting vote. If passed, it would reduce the threshold for itemizing medical expenses as deductions and would require multi-state and multi-national businesses with holdings in Idaho to report previous earning from foreign subsidiaries.


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Idaho Capitol Building

State Tax Commission Tax Policy Specialist Tom Shaner said Friday the fiscal impact for reducing the medical expense threshold is expected to have a negative fiscal impact of $6.4 million.

He also said the change in filing for businesses would have a positive impact, but he said he cannot specify an amount because it would require the commission to look at the 8,000 Idaho businesses affected on a case-by-case basis.

At a special joint taxation committee last Tuesday, Jan. 16, analysts from the commission said conforming to federal tax reform would increase state revenues by $97.4 million in fiscal 2018, but could not specify the impact of conformity in fiscal 2017.

Conforming to the IRC for definitions of individual income is a common practice in years past, as 41 of 50 states – including Idaho – have done so¬, tax commission chairman Ken Roberts said.

If the state does not conform to federal definitions of income, Roberts and other analysts warned taxpayers would likely pay more to accountants and tax specialists for administrative fees.

“We use a lot of the definitions of what income is and those sort of things so we, in Idaho, don’t need to have our own income tax code,” Roberts said Tuesday. “If we did, we would have to remodel parts of the capitol to make bigger book cases because you’re talking a large volumes of words to define all of those circumstances.”

With such sweeping changes to individual income, Democratic committee members in Tuesday’s hearing worried of the impact to families.

“Is there anything that would prevent us from providing some kind of child credit,” Rep. John Gannon, D-Boise, asked Shaner who responded that additional legislation could create one.

House Minority Leader Rep. Mat Erpelding, D-Boise, said in an interview after the hearing, that he worries about the impact to residents with dependents, which includes families and those who care for loved ones.

“If you have a dependent, you’re going to end up paying more. Particularly if you have two or three dependents, you’re going to end up paying more,” he said.

Erpelding and other Democratic legislators have recently spoken against Gov. Otter’s proposed $85 non-refundable tax credit for children, saying it is not a large enough credit to offset the other changes to personal income taxes. The Spokesman-Review reported Erpelding said last week a refundable tax credit of $250 would likely benefit families substantially.


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