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H0801...............................................by REVENUE AND TAXATION INCOME TAX - Amends existing law to provide an income tax deduction for a taxpayer who is a self-employed individual treated as an employee for medical insurance for the taxpayer, spouse and dependents; to decrease the individual income tax rates; to provide for elimination from calculation of Idaho income tax any marriage penalty that may exist in the basic standard deduction; and to increase the maximum amount of the allowable tax credit of the investment tax credit. 03/30 House intro - 1st rdg - to printing Rpt prt - 2nd rdg - to 3rd rdg Rules susp - PASSED - 57-7-6 AYES -- Alltus, Barraclough, Barrett, Black, Bruneel, Callister, Campbell, Cheirrett, Clark, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley, Hammond, Hansen(23), Hornbeck, Jones(Jones), Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Loertscher, Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Ridinger, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Tilman, Trail, Wheeler, Wood, Zimmermann NAYS -- Bieter, Boe, Chase, Henbest, Jaquet, Ringo, Robison Absent and excused -- Bell, Hansen(29), Linford, Reynolds, Taylor, Mr Speaker Floor Sponsors - Crow, Moyle Title apvd - to Senate 04/03 Senate intro - 1st rdg - to Loc Gov
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 801 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 SEC- 12 TION 63-3024, IDAHO CODE, TO PROVIDE THAT FOR TAX YEAR 2000 AND EACH YEAR 13 THEREAFTER, THE RATE FOR INDIVIDUAL INCOME TAX SHALL BE DECREASED; REPEAL- 14 ING SECTION 63-3022N, IDAHO CODE; AMENDING CHAPTER 30, TITLE 63, IDAHO 15 CODE, BY THE ADDITION OF A NEW SECTION 63-3022N, IDAHO CODE, TO PROVIDE 16 FOR THE ELIMINATION FROM THE CALCULATION OF IDAHO TAXABLE INCOME ANY MAR- 17 RIAGE PENALTY THAT MAY EXIST IN THE BASIC STANDARD DEDUCTION PROVIDED IN 18 THE INTERNAL REVENUE CODE, TO PROVIDE FOR ADJUSTMENTS, TO PROVIDE A DEFI- 19 NITION OF "THE MARRIAGE PENALTY" AND TO PROVIDE PROCEDURES; AMENDING SEC- 20 TION 63-3029B, IDAHO CODE, TO INCREASE THE MAXIMUM AMOUNT OF THE ALLOWABLE 21 TAX CREDIT OF THE INVESTMENT TAX CREDIT AND TO MAKE TECHNICAL CORRECTIONS; 22 DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION. 23 Be It Enacted by the Legislature of the State of Idaho: 24 SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is 25 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 26 ignated as Section 63-3022O, Idaho Code, and to read as follows: 27 63-3022O. HEALTH INSURANCE COSTS. With respect to a taxpayer who is a 28 self-employed individual treated as an employee pursuant to section 401(c)(1) 29 of the Internal Revenue Code, an amount equal to the amount paid by the tax- 30 payer during the taxable year for insurance, which constitutes medical care 31 for the taxpayer and the spouse and dependents of the taxpayer which is not 32 otherwise deductible by the taxpayer for federal income tax purposes because 33 the applicable percentage for that taxable year as specified pursuant to sec- 34 tion 162(1) of the Internal Revenue Code is less than one hundred percent 35 (100%), shall be allowed as a deduction against taxable income. 36 SECTION 2. That Section 63-3024, Idaho Code, be, and the same is hereby 37 amended to read as follows: 38 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For each taxable 39 year on and after January 1, 2000, a tax measured by Idaho taxable income as 40 defined in this chapter is hereby imposed upon every individual, trust, or 41 estate required by this chapter to file a return. 2 1 (a) The tax imposed upon individuals, trusts and estates shall be com- 2 puted at the following rates: 3 When Idaho taxable income is: The rate is: 4 Less than $1,000 TwoOne and nine-tenths percent ( 2.01.9%) 5 $1,000 but less than $2,000 $20, plus fourthree and nine-tenths 6 percent ( 4.03.9%) of the amount over $1,000 7 $2,000 but less than $3,000 $60, plus four and one-halffour-tenths 8 percent (4. 54%) of the amount over $2,000 9 $3,000 but less than $4,000 $105, plus five and one-halffour-tenths 10 percent (5. 54%) of the amount over $3,000 11 $4,000 but less than $5,000 $160, plus six and one-halffour-tenths 12 percent (6. 54%) of the amount over $4,000 13 $5,000 but less than $7,500 $225, plus seven and one-halffour-tenths 14 percent (7. 54%) of the amount over $5,000 15 $7,500 but less than $20,000 $412.50, plus seven and eightseven-tenths 16 percent (7. 87%) of the amount over $7,500 17 Over $20,000 $1,387.50, plus eight and twoone-tenth s18 percent (8. 21%) of the amount over $20,000 19 (b) In case a joint return is filed by husband and wife pursuant to the 20 provisions of section 63-3031, Idaho Code, the tax imposed by this section 21 shall be twice the tax which would be imposed on one-half (1/2) of the aggre- 22 gate Idaho taxable income. For the purposes of this section, a return of a 23 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and 24 a head of household, as defined in section 2(b) of the Internal Revenue Code, 25 shall be treated as a joint return and the tax imposed shall be twice the tax 26 which would be imposed on one-half (1/2) of the Idaho taxable income. 27 (c) The state tax commission shall compute and publish Idaho income tax 28 liability for taxpayers at the midpoint of each bracket of Idaho taxable 29 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000), 30 rounding such calculations to the nearest dollar. Taxpayers having income 31 within such brackets shall file returns based upon and pay taxes according to 32 the schedule thus established. The state tax commission shall promulgate rules 33 defining the conditions upon which such returns shall be filed. 34 SECTION 2. That Section 63-3022N, Idaho Code, be, and the same is hereby 35 repealed. 36 SECTION 3. That Chapter 30, Title 63, Idaho Code, be, and the same is 37 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 38 ignated as Section 63-3022N, Idaho Code, and to read as follows: 39 63-3022N. MARRIAGE PENALTY ADJUSTMENT. (1) To eliminate from the calcula- 40 tion of Idaho taxable income any marriage penalty that may exist in the basic 41 standard deductions provided in the Internal Revenue Code, basic federal stan- 42 dard deductions shall be adjusted as provided in this section. 43 (2) As used in this section, "the marriage penalty" means the difference 44 obtained by subtracting: 45 (a) The basic standard deduction for joint returns, from 46 (b) Two (2) times the basic standard deduction for an individual who is 47 not married and who is not a surviving spouse or head of household. 48 (3) For each taxable year beginning on and after January 1, 2000, the 49 standard deduction in section 63-3022(k)(1), Idaho Code, shall be: on a joint 50 return, the basic federal joint standard deduction plus the marriage penalty, 51 rounded to the nearest dollar, plus the amount of any additional standard 52 deduction for the aged or blind for which a taxpayer may qualify under section 3 1 63 of the Internal Revenue Code. 2 (4) The basic federal standard deduction for an individual for whom a 3 deduction under section 151 of the Internal Revenue Code is allowable to 4 another taxpayer shall not be reduced below the minimum adjusted basic stan- 5 dard deduction provided by section 63 of the Internal Revenue Code. 6 SECTION 4. That Section 63-3029B, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election 9 of the taxpayer there shall be allowed, subject to the applicable limitations 10 provided herein as a credit against the income tax imposed by chapter 30, 11 title 63, Idaho Code, an amount equal to the sum of: 12 (a) tThe tax credit carry-overscarryovers; and 13 (b) tThe tax credit for the taxable year. 14 (2) The maximum allowable amount of the credit for the current taxable 15 year shall be three percent (3%) of the amount of qualified investments made 16 during the taxable year. 17 (3) As used in this section "qualified investment" means certain depre- 18 ciable property which: 19 (a) iIs eligible for the federal investment tax credit, as defined in 20 sections 46(c) and 48 of the iInternal rRevenue cCode subject to the lim- 21 itations provided for certain regulated companies in section 46(f) of the 22 iInternal rRevenue cCode and is not a motor vehicle under eight thousand 23 (8,000) pounds gross weight; 24 (b) iIs acquired, constructed, reconstructed, erected or placed into ser- 25 vice after December 31, 1981; and 26 (c) hHas a situs in Idaho. 27 (4) Notwithstanding the provisions of subsections (1) and (2) of this 28 section, the amount of the credit allowed shall not exceed forty-fivefifty 29 percent ( 450%) of the tax liability of the taxpayer. 30 (5) If the sum of credit carry-overscarryovers from the credit allowed 31 by subsection (2) of this section and the amount of credit for the taxable 32 year from the credit allowed by subsection (2) of this section exceed the lim- 33 itation imposed by subsection (4) of this section for the current taxable 34 year, the excess attributable to the current taxable year's credit shall be an 35 investment credit carry-overcarryover to the seven (7) succeeding taxable 36 years. In the case of a group of corporations filing a combined report under 37 section 63-3027, Idaho Code, or sections 63-3027B through 63-3027E, Idaho 38 Code, credit earned by one (1) member of the group but not used by that member 39 may be used by another member of the group, subject to the provisions of sub- 40 section (4) of this section, instead of carried over. The entire amount of 41 unused credit shall be carried forward to the earliest of the succeeding 42 years, wherein the oldest available unused credit shall be used first, so long 43 as the qualified investment property for which the unused credit was granted 44 still maintains Idaho situs. For a combined group of corporations, credit car- 45 ried forward may be claimed by any member of the group unless the member who 46 earned the credit is no longer included in the combined group. 47 (6) Any recapture of the credit allowed by subsection (2) of this section 48 on property disposed of or ceasing to qualify, prior to the close of its use- 49 ful life, shall be determined according to the applicable recapture provisions 50 of the iInternal rRevenue cCode. In the case of a unitary group of corpora- 51 tions, the increase in tax due to the recapture of investment tax credit must 52 be reported by the member of the group who earned the credit regardless of 53 which member claimed the credit against tax. 4 1 (7) For the purpose of determining whether property placed in service is 2 a "qualified investment" as defined in subsection (3) of this section, the 3 provisions of section 49 of the iInternal rRevenue cCode shall be disregarded. 4 (8) For purposes of this section, property has a situs in Idaho during a 5 taxable year if it is used in Idaho at any time during the taxable year. Prop- 6 erty not used in Idaho during a taxable year does not have a situs in Idaho in 7 the taxable year during which the property is not used in Idaho or in any sub- 8 sequent taxable year. No credit or carry-overcarryover of credit is permitted 9 under this section if the credit or carry-overcarryover relates to property 10 that does not have a situs in Idaho during the taxable year for which the 11 credit or carry-overcarryover is claimed. The Idaho situs of property must be 12 established by records maintained by the taxpayer which are created reasonably 13 contemporaneously with the use of the property. 14 (9) In the case of property used both in and outside Idaho, the taxpayer, 15 electing to claim the credit provided in this section, must elect to compute 16 the qualified investment in property with a situs in Idaho for all such 17 investments first qualifying during that year in one (1), but only one (1), of 18 the following ways: 19 (a) tThe amount of each qualified investment in a specific asset shall be 20 separately computed based on the percentage of the actual use of the prop- 21 erty in Idaho by using a measure of the use, such as total miles or total 22 machine hours, that most accurately reflects the beneficial use during the 23 taxable year in which it is first acquired, constructed, reconstructed, 24 erected or placed into service; provided, that the asset is placed in ser- 25 vice more than ninety (90) days before the end of the taxable year. In the 26 case of assets acquired, constructed, reconstructed, erected or placed 27 into service within ninety (90) days prior to the end of the taxable year 28 in which the investment first qualifies, the measure of the use of that 29 asset within Idaho for that year shall be based upon the percentage of use 30 in Idaho during the first ninety (90) days of use of the asset; 31 (b) tThe investment in qualified property used both inside and outside 32 Idaho during the taxable year in which it is first acquired, constructed, 33 reconstructed, erected or placed into service shall be multiplied by the 34 percent of the investment that would be included in the numerator of the 35 Idaho property factor determined pursuant to section 63-3027, Idaho Code, 36 for the same year. 37 (10) Only for the purposes of subsections (3)(a) and (7) of this section, 38 references to sections of the " iInternal rRevenue cCode" mean the sections 39 referred to as they existed in the iInternal rRevenue cCode of 1986 prior to 40 November 5, 1990. 41 SECTION 6. An emergency existing therefor, which emergency is hereby 42 declared to exist, this act shall be in full force and effect on and after its 43 passage and approval and retroactively to January 1, 2000.
STATEMENT OF PURPOSE RS10342 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 decreases the individual income tax rates by one-tenth of one percent(.1%). It further provides for elimination from the calculation of Idaho taxable income any marriage penalty. This legislation also increases the investment tax credit maximum amount from 45 to 50. FISCAL IMPACT The fiscal impact is projected as follows: Health Insurance Deduction for Self-Employed $ 1,600,000.00 "Marriage Tax Penalty" fully funded 10,600,000.00 Individual Income Tax Rate Reduction of .1% 12,500,000.00 Investment Tax Credit-Increase 2,100,000.00 Total: $26,800,000.00 CONTACT: Rep. Dolores Crow Rep. Mike Moyle Phone: (208) 332-1000 STATEMENT OF PURPOSE/ FISCAL IMPACT H 801