View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
H0803...............................................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 prescribe a factor to compute Idaho income
tax so that inflation will not result in a tax increase; to provide
legislative intent that the individual income tax rates be reviewed
annually; 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 - 52-13-5
AYES -- Alltus, Barraclough, Barrett, Black, Bruneel, Callister,
Campbell, Cheirrett, Clark, Crow, Deal, Denney, Ellsworth, Field(13),
Field(20), Gagner, Geddes, Gould, Hadley, Hammond, Hansen(23),
Henbest, Hornbeck, Jones(Jones), Kellogg, Kempton, Kendell, Kunz,
Lake, Loertscher, Mader, McKague, Meyer, Montgomery, Mortensen, Moss,
Moyle, Pearce, Pischner, Pomeroy, Sali, Schaefer, Sellman, Smith,
Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Zimmermann
NAYS -- Bieter, Boe, Chase, Cuddy, Hansen(29), Jaquet, Judd, Marley,
Ridinger, Ringo, Robison, Shepherd, Stoicheff
Absent and excused -- Bell, Linford, Reynolds, Taylor, Mr Speaker
Floor Sponsors - Crow, Moyle
Title apvd - to Senate
04/03 Senate intro - 1st rdg - to Loc Gov
H0803
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 803
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, TO PRO-
14 VIDE THAT FOR TAX YEAR 2000 AND EACH YEAR THEREAFTER, THE STATE TAX COM-
15 MISSION SHALL PRESCRIBE A FACTOR TO COMPUTE IDAHO TAXABLE INCOME FOR TAX
16 BRACKET PURPOSES SO THAT INFLATION WILL NOT RESULT IN A TAX INCREASE, TO
17 PROVIDE THE FORMULA AND TO PROVIDE DUTIES OF THE STATE TAX COMMISSION;
18 AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SEC-
19 TION 63-3024C, IDAHO CODE, TO PROVIDE A STATEMENT OF LEGISLATIVE INTENT
20 FOR REVIEW OF INDIVIDUAL INCOME TAX RATES; REPEALING SECTION 63-3022N,
21 IDAHO CODE; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF
22 A NEW SECTION 63-3022N, IDAHO CODE, TO PROVIDE FOR THE ELIMINATION FROM
23 THE CALCULATION OF IDAHO TAXABLE INCOME ANY MARRIAGE PENALTY THAT MAY
24 EXIST IN THE BASIC STANDARD DEDUCTION PROVIDED IN THE INTERNAL REVENUE
25 CODE, TO PROVIDE FOR ADJUSTMENTS, TO PROVIDE A DEFINITION OF "THE MARRIAGE
26 PENALTY" AND TO PROVIDE PROCEDURES; AMENDING SECTION 63-3029B, IDAHO CODE,
27 TO INCREASE THE MAXIMUM AMOUNT OF THE ALLOWABLE TAX CREDIT OF THE INVEST-
28 MENT TAX CREDIT AND TO MAKE TECHNICAL CORRECTIONS; DECLARING AN EMERGENCY
29 AND PROVIDING RETROACTIVE APPLICATION.
30 Be It Enacted by the Legislature of the State of Idaho:
31 SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is
32 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
33 ignated as Section 63-3022O, Idaho Code, and to read as follows:
34 63-3022O. HEALTH INSURANCE COSTS. With respect to a taxpayer who is a
35 self-employed individual treated as an employee pursuant to section 401(c)(1)
36 of the Internal Revenue Code, an amount equal to the amount paid by the tax-
37 payer during the taxable year for insurance, which constitutes medical care
38 for the taxpayer and the spouse and dependents of the taxpayer which is not
39 otherwise deductible by the taxpayer for federal income tax purposes because
40 the applicable percentage for that taxable year as specified pursuant to sec-
41 tion 162(1) of the Internal Revenue Code is less than one hundred percent
42 (100%), shall be allowed as a deduction against taxable income.
2
1 SECTION 2. That Section 63-3024, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For each taxable
4 year on and after January 1, 2000, a tax measured by Idaho taxable income as
5 defined in this chapter is hereby imposed upon every individual, trust, or
6 estate required by this chapter to file a return.
7 (a) The tax imposed upon individuals, trusts and estates shall be com-
8 puted at the following rates:
9 When Idaho taxable income is: The rate is:
10 Less than $1,000 Two One and nine-tenths percent (2.01.9%)
11 $1,000 but less than $2,000 $20, plus four three and nine-tenths
12 percent (4.03.9%) of the amount over $1,000
13 $2,000 but less than $3,000 $60, plus four and one-half four-tenths
14 percent (4.54%) of the amount over $2,000
15 $3,000 but less than $4,000 $105, plus five and one-half four-tenths
16 percent (5.54%) of the amount over $3,000
17 $4,000 but less than $5,000 $160, plus six and one-half four-tenths
18 percent (6.54%) of the amount over $4,000
19 $5,000 but less than $7,500 $225, plus seven and one-half four-tenths
20 percent (7.54%) of the amount over $5,000
21 $7,500 but less than $20,000 $412.50, plus seven and eightseven-tenths
22 percent (7.87%) of the amount over $7,500
23 Over $20,000 $1,387.50, plus eight and twoone-tenths
24 percent (8.21%) of the amount over $20,000
25 For tax year 2000 and each year thereafter, the state tax commission shall
26 prescribe a factor which shall be used to compute the Idaho income tax brack-
27 ets provided above. The factor shall provide an adjustment to the Idaho tax
28 brackets so that inflation will not result in a tax increase. The Idaho tax
29 brackets shall be adjusted as follows: multiply the bracket amounts by the
30 percentage (the consumer price index for the calendar year immediately preced-
31 ing the calendar year to which the adjusted brackets will apply divided by the
32 consumer price index for calendar year 1998). For the purpose of this computa-
33 tion, the consumer price index for any calendar year is the average of the
34 consumer price index as of the close of the twelve (12) month period for the
35 immediately preceding calendar year as adopted by the state tax commission.
36 This adoption shall be exempt from the provisions of chapter 52, title 67,
37 Idaho Code. The consumer price index shall mean the consumer price index for
38 all U.S. urban consumers published by the United States department of labor.
39 The state tax commission shall annually include the factor as provided in this
40 subsection to multiply against Idaho taxable income in the brackets above to
41 arrive at that year's taxable income for tax bracket purposes.
42 (b) In case a joint return is filed by husband and wife pursuant to the
43 provisions of section 63-3031, Idaho Code, the tax imposed by this section
44 shall be twice the tax which would be imposed on one-half (1/2) of the aggre-
45 gate Idaho taxable income. For the purposes of this section, a return of a
46 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
47 a head of household, as defined in section 2(b) of the Internal Revenue Code,
48 shall be treated as a joint return and the tax imposed shall be twice the tax
49 which would be imposed on one-half (1/2) of the Idaho taxable income.
50 (c) The state tax commission shall compute and publish Idaho income tax
51 liability for taxpayers at the midpoint of each bracket of Idaho taxable
52 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000),
53 rounding such calculations to the nearest dollar. Taxpayers having income
54 within such brackets shall file returns based upon and pay taxes according to
3
1 the schedule thus established. The state tax commission shall promulgate rules
2 defining the conditions upon which such returns shall be filed.
3 SECTION 3. That Chapter 30, Title 63, Idaho Code, be, and the same is
4 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
5 ignated as Section 63-3024C, Idaho Code, and to read as follows:
6 63-3024C. LEGISLATIVE REVIEW. Enactment of the reduction of rates imposed
7 upon individual income taxes through amendment to section 63-3024, Idaho Code,
8 is made in recognition of the specific economic factors prevailing at the time
9 of the adoption. It is the intent of the legislature that the individual
10 income tax rate shall be reviewed annually and necessary adjustments may be
11 made when economic conditions require.
12 SECTION 4. That Section 63-3022N, Idaho Code, be, and the same is hereby
13 repealed.
14 SECTION 5. That Chapter 30, Title 63, Idaho Code, be, and the same is
15 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
16 ignated as Section 63-3022N, Idaho Code, and to read as follows:
17 63-3022N. MARRIAGE PENALTY ADJUSTMENT. (1) To eliminate from the calcula-
18 tion of Idaho taxable income any marriage penalty that may exist in the basic
19 standard deductions provided in the Internal Revenue Code, basic federal stan-
20 dard deductions shall be adjusted as provided in this section.
21 (2) As used in this section, "the marriage penalty" means the difference
22 obtained by subtracting:
23 (a) The basic standard deduction for joint returns, from
24 (b) Two (2) times the basic standard deduction for an individual who is
25 not married and who is not a surviving spouse or head of household.
26 (3) For each taxable year beginning on and after January 1, 2000, the
27 standard deduction in section 63-3022(k)(1), Idaho Code, shall be: on a joint
28 return, the basic federal joint standard deduction plus the marriage penalty,
29 rounded to the nearest dollar, plus the amount of any additional standard
30 deduction for the aged or blind for which a taxpayer may qualify under section
31 63 of the Internal Revenue Code.
32 (4) The basic federal standard deduction for an individual for whom a
33 deduction under section 151 of the Internal Revenue Code is allowable to
34 another taxpayer shall not be reduced below the minimum adjusted basic stan-
35 dard deduction provided by section 63 of the Internal Revenue Code.
36 SECTION 6. That Section 63-3029B, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
39 of the taxpayer there shall be allowed, subject to the applicable limitations
40 provided herein as a credit against the income tax imposed by chapter 30,
41 title 63, Idaho Code, an amount equal to the sum of:
42 (a) tThe tax credit carry-overs carryovers; and
43 (b) tThe tax credit for the taxable year.
44 (2) The maximum allowable amount of the credit for the current taxable
45 year shall be three percent (3%) of the amount of qualified investments made
46 during the taxable year.
47 (3) As used in this section "qualified investment" means certain depre-
48 ciable property which:
4
1 (a) iIs eligible for the federal investment tax credit, as defined in
2 sections 46(c) and 48 of the iInternal rRevenue cCode subject to the lim-
3 itations provided for certain regulated companies in section 46(f) of the
4 iInternal rRevenue cCode and is not a motor vehicle under eight thousand
5 (8,000) pounds gross weight;
6 (b) iIs acquired, constructed, reconstructed, erected or placed into ser-
7 vice after December 31, 1981; and
8 (c) hHas a situs in Idaho.
9 (4) Notwithstanding the provisions of subsections (1) and (2) of this
10 section, the amount of the credit allowed shall not exceed forty-five fifty
11 percent (450%) of the tax liability of the taxpayer.
12 (5) If the sum of credit carry-overs carryovers from the credit allowed
13 by subsection (2) of this section and the amount of credit for the taxable
14 year from the credit allowed by subsection (2) of this section exceed the lim-
15 itation imposed by subsection (4) of this section for the current taxable
16 year, the excess attributable to the current taxable year's credit shall be an
17 investment credit carry-over carryover to the seven (7) succeeding taxable
18 years. In the case of a group of corporations filing a combined report under
19 section 63-3027, Idaho Code, or sections 63-3027B through 63-3027E, Idaho
20 Code, credit earned by one (1) member of the group but not used by that member
21 may be used by another member of the group, subject to the provisions of sub-
22 section (4) of this section, instead of carried over. The entire amount of
23 unused credit shall be carried forward to the earliest of the succeeding
24 years, wherein the oldest available unused credit shall be used first, so long
25 as the qualified investment property for which the unused credit was granted
26 still maintains Idaho situs. For a combined group of corporations, credit car-
27 ried forward may be claimed by any member of the group unless the member who
28 earned the credit is no longer included in the combined group.
29 (6) Any recapture of the credit allowed by subsection (2) of this section
30 on property disposed of or ceasing to qualify, prior to the close of its use-
31 ful life, shall be determined according to the applicable recapture provisions
32 of the iInternal rRevenue cCode. In the case of a unitary group of corpora-
33 tions, the increase in tax due to the recapture of investment tax credit must
34 be reported by the member of the group who earned the credit regardless of
35 which member claimed the credit against tax.
36 (7) For the purpose of determining whether property placed in service is
37 a "qualified investment" as defined in subsection (3) of this section, the
38 provisions of section 49 of the iInternal rRevenue cCode shall be disregarded.
39 (8) For purposes of this section, property has a situs in Idaho during a
40 taxable year if it is used in Idaho at any time during the taxable year. Prop-
41 erty not used in Idaho during a taxable year does not have a situs in Idaho in
42 the taxable year during which the property is not used in Idaho or in any sub-
43 sequent taxable year. No credit or carry-over carryover of credit is permitted
44 under this section if the credit or carry-over carryover relates to property
45 that does not have a situs in Idaho during the taxable year for which the
46 credit or carry-over carryover is claimed. The Idaho situs of property must be
47 established by records maintained by the taxpayer which are created reasonably
48 contemporaneously with the use of the property.
49 (9) In the case of property used both in and outside Idaho, the taxpayer,
50 electing to claim the credit provided in this section, must elect to compute
51 the qualified investment in property with a situs in Idaho for all such
52 investments first qualifying during that year in one (1), but only one (1), of
53 the following ways:
54 (a) tThe amount of each qualified investment in a specific asset shall be
55 separately computed based on the percentage of the actual use of the prop-
5
1 erty in Idaho by using a measure of the use, such as total miles or total
2 machine hours, that most accurately reflects the beneficial use during the
3 taxable year in which it is first acquired, constructed, reconstructed,
4 erected or placed into service; provided, that the asset is placed in ser-
5 vice more than ninety (90) days before the end of the taxable year. In the
6 case of assets acquired, constructed, reconstructed, erected or placed
7 into service within ninety (90) days prior to the end of the taxable year
8 in which the investment first qualifies, the measure of the use of that
9 asset within Idaho for that year shall be based upon the percentage of use
10 in Idaho during the first ninety (90) days of use of the asset;
11 (b) tThe investment in qualified property used both inside and outside
12 Idaho during the taxable year in which it is first acquired, constructed,
13 reconstructed, erected or placed into service shall be multiplied by the
14 percent of the investment that would be included in the numerator of the
15 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
16 for the same year.
17 (10) Only for the purposes of subsections (3)(a) and (7) of this section,
18 references to sections of the "iInternal rRevenue cCode" mean the sections
19 referred to as they existed in the iInternal rRevenue cCode of 1986 prior to
20 November 5, 1990.
21 SECTION 7. An emergency existing therefor, which emergency is hereby
22 declared to exist, this act shall be in full force and effect on and after its
23 passage and approval, and retroactively to January 1, 2000.
STATEMENT OF PURPOSE
RS10345
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 increases the investment tax credit
maximum amount from 45 to 50 and includes the Individual Income Tax CPI
Bracket Adjustment for the tax year 2000.
This legislation also adds Legislative Intent.
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
Individual Income Tax CPI Bracket Adj (tax year 2000) 2,150,000.00
Investment Tax Credit Increase 2,100,000.00
Total: $28,950,000.00
CONTACT: Rep. Dolores Crow
Rep. Mike Moyle
Phone: (208) 332-1000
STATEMENT OF PURPOSE/ FISCAL IMPACT H 803