2000 Legislation
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HOUSE BILL NO. 656 – Income tax, rate reduced, deductns

HOUSE BILL NO. 656

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H0656...............................................by REVENUE AND TAXATION
INCOME TAX - Amends and adds to existing law to provide an income tax
deduction for certain expenses of a taxpayer who is a self-employed
individual treated as an employee; to provide an additional deduction of
three hundred dollars which shall be allowed in the case of a joint return
where the standard deduction is claimed; to provide an income tax credit
for tax year 2000 of five percent of the taxpayer's state income tax
liability; to decrease the corporate income tax rate and franchise tax rate
beginning in tax year 2001; to provide that for tax year 2001 and
thereafter, the State Tax Commission shall prescribe a factor to compute
taxable income so that inflation will not result in a tax increase, to
provide the formula and provide duties of the State Tax Commission.
                                                                        
02/22    House intro - 1st rdg - to printing
02/23    Rpt prt - to Rev/Tax

Bill Text


 H0656
                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 656
                                                                        
                             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  63-3022N,  IDAHO  CODE,  TO PROVIDE AN ADDITIONAL DEDUCTION OF THREE
 13        HUNDRED DOLLARS WHICH SHALL BE ALLOWED IN THE CASE OF A JOINT RETURN WHERE
 14        THE STANDARD DEDUCTION IS CLAIMED; AMENDING CHAPTER 30,  TITLE  63,  IDAHO
 15        CODE, BY THE ADDITION OF A NEW SECTION 63-3022P, IDAHO CODE, TO PROVIDE AN
 16        INCOME  TAX  CREDIT  FOR  TAX  YEAR 2000 OF FIVE PERCENT OF THE TAXPAYER'S
 17        STATE INCOME TAX LIABILITY;  AMENDING  SECTION  63-3025,  IDAHO  CODE,  TO
 18        DECREASE  THE  CORPORATE INCOME TAX RATE; AMENDING SECTION 63-3025A, IDAHO
 19        CODE, TO DECREASE THE FRANCHISE TAX RATE AND  TO  MAKE  TECHNICAL  CORREC-
 20        TIONS;  AMENDING  SECTION 63-3024, IDAHO CODE, TO REVISE BRACKETS AND PER-
 21        CENTAGE OF STATE INCOME TAX; DECLARING AN EMERGENCY, PROVIDING RETROACTIVE
 22        APPLICATION AND PROVIDING EFFECTIVE DATES.
                                                                        
 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 63-3022N, Idaho Code, be, and the same is  hereby
 37    amended to read as follows:
                                                                        
 38        63-3022N.  MARRIAGE PENALTY REDUCTION. For taxable years commencing on and
 39    after  January 1, 19992000, an additional deduction of one hundred fifty three
 40    hundred dollars ($15300) shall be allowed in the case of a joint return  where
 41    the standard deduction as defined in section 63-3022, Idaho Code, is claimed.
                                                                        
                                           2
                                                                        
  1        SECTION  3.  That  Chapter  30,  Title 63, Idaho Code, be, and the same is
  2    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
  3    ignated as Section 63-3022P, Idaho Code, and to read as follows:
                                                                        
  4        63-3022P.  INCOME  TAX  CREDIT  FOR TAX YEAR 2000. For tax year 2000 only,
  5    there shall be allowed a credit equal to five percent (5%) of  the  taxpayer's
  6    income  tax  liability for tax year 2000 as computed by section 63-3024, Idaho
  7    Code.
                                                                        
  8        SECTION 4.  That Section 63-3025, Idaho Code, be, and the same  is  hereby
  9    amended to read as follows:
                                                                        
 10        63-3025.  TAX  ON  CORPORATE  INCOME.  For taxable years commencing on and
 11    after January 1, 19872000, a tax is hereby imposed on the Idaho taxable income
 12    of a corporation which transacts or is authorized to transact business in this
 13    state or which has income attributable to this state. The tax shall  be  equal
 14    to  seven  and  eight-tenths percent (7.8%) of Idaho taxable income; provided,
 15    however, that the tax shall not be less than twenty dollars ($20.00); provided
 16    further that the twenty dollar ($20.00) minimum payment shall not be collected
 17    from nonproductive mining corporations. The tax imposed by this section  shall
 18    not  apply  to  corporations  taxed  pursuant  to  the  provisions  of section
 19    63-3025A, Idaho Code.
                                                                        
 20        SECTION 5.  That Section 63-3025A, Idaho Code, be, and the same is  hereby
 21    amended to read as follows:
                                                                        
 22        63-3025A.  FRANCHISE  TAX. For taxable years commencing on and after Janu-
 23    ary 1, 19872000, a franchise tax shall be imposed upon any corporation for the
 24    privilege of exercising its corporate franchise within the state  during  such
 25    taxable  year, including, but not limited to, corporations engaged in business
 26    in Idaho for the exclusive purpose of performing  contracts  with  the  United
 27    States  department of energy at the Idaho national engineering and environmen-
 28    tal laboratory, which tax shall be measured by income which is attributable to
 29    this state under the provisions of this chapter and which tax shall  be  equal
 30    to  seven  and  eight-tenths percent (7.8%) of Idaho taxable income; provided,
 31    however, that the tax shall not be less than twenty dollars ($20.00); provided
 32    further that the twenty dollar ($20.00) minimum payment shall not be collected
 33    from nonproductive mining corporations; but the twenty dollar ($20.00) minimum
 34    tax shall apply to corporations qualified to file returns and actually  filing
 35    returns under the provisions of subchapter "S" of the Internal Revenue Code.
                                                                        
 36        SECTION  6.  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, 2001, 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.
 42        (a)  The tax imposed upon individuals, trusts and estates  shall  be  com-
 43    puted at the following rates:
 44    When Idaho taxable income is:    The rate is:
 45    Less than $1,000                 Two percent (2.0%)
 46    $1,000 but less than $2,000      $20, plus four percent (4.0%)
 47                                     of the amount over $1,000
 48    $2,000 but less than $3,000      $60, plus four and one-half percent
                                                                        
                                           3
                                                                        
  1                                     (4.5%) of the amount over $2,000
  2    $3,000 but less than $4,000      $105, plus five and one-half percent
  3                                     (5.5%) of the amount over $3,000
  4    $4,000 but less than $5,000      $160, plus six and one-half percent
  5                                     (6.5%) of the amount over $4,000
  6    $5,000 but less than $7,500      $225, plus seven and one-half percent
  7                                     (7.5%) of the amount over $5,000
  8    $7,500 but less than $20,000     $412.50, plus seven and eight-tenths percent
  9                                     (7.8%) of the amount over $7,500
 10    Over $20,000                     $1,387.50, plus eight and two-tenths percent
 11                                     (8.2%) of the amount over $20,000
 12        (1)  On  the  first  $1,000 of such taxable income or any part thereof, at
 13        the rate of two percent (2.0%);
 14        (2)  On the second $1,000 of such taxable income or any part  thereof,  at
 15        the rate of four percent (4.0%);
 16        (3)  On  the  third  $1,000 of such taxable income or any part thereof, at
 17        the rate of four and one-half percent (4.5%);
 18        (4)  On the fourth $1,000 of such taxable income or any part  thereof,  at
 19        the rate of five and one-half percent (5.5%);
 20        (5)  On  the  fifth  $1,000 of such taxable income or any part thereof, at
 21        the rate of six and one-half percent (6.5%);
 22        (6)  On any taxable income in excess of $5,000 at the rate  of  seven  and
 23        one-half percent (7.5%).
 24        (b)  In  case  a joint return is filed by husband and wife pursuant to the
 25    provisions of section 63-3031, Idaho Code, the tax  imposed  by  this  section
 26    shall  be twice the tax which would be imposed on one-half (1/2) of the aggre-
 27    gate Idaho taxable income. For the purposes of this section,  a  return  of  a
 28    surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
 29    a  head of household, as defined in section 2(b) of the Internal Revenue Code,
 30    shall be treated as a joint return and the tax imposed shall be twice the  tax
 31    which would be imposed on one-half (1/2) of the Idaho taxable income.
 32        (c)  The  state  tax commission shall compute and publish Idaho income tax
 33    liability  for taxpayers at the midpoint of  each  bracket  of  Idaho  taxable
 34    income  in  fifty  dollar  ($50.00) steps to fifty thousand dollars ($50,000),
 35    rounding such calculations to the  nearest  dollar.  Taxpayers  having  income
 36    within  such brackets shall file returns based upon and pay taxes according to
 37    the schedule thus established. The state tax commission shall promulgate rules
 38    defining the conditions upon which such returns shall be filed.
                                                                        
 39        SECTION 7.  An emergency existing  therefor,  which  emergency  is  hereby
 40    declared  to  exist,  Sections 1, 2, 3, 4 and 5  of  this act shall be in full
 41    force and effect on and after its passage and approval, and  retroactively  to
 42    January  1, 2000; and Section 6 shall be in full force and effect on and after
 43    January 1, 2001.

Statement of Purpose / Fiscal Impact


     
                           
                STATEMENT OF PURPOSE 
                       RS10138 
                           
          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 adds an additional deduction of $300 for joint returns where the
     standard deduction is claimed and gives a one-time tax credit of 5% for their state
     income tax liability for the tax year 2000. 
          This legislation decreases the corporate income tax rate and revises
     brackets and percentages of state income tax rates back to 1987 state income tax
     rates beginning in the year 2001. 
     
     
                           
                     FISCAL NOTE 
     
     The fiscal impact is projected as follows: 
     Health Insurance Deduction for Self-Employed              1,600,000
     Additional Joint Filer Deduction Raised to $300             1,225,000
     A One-time 5% Individual Income Tax Credit               44,510,000
     Decreases Corporate Income Tax Rates to 7.8%              2,900,000 
                                                                           Total:       $50,235,000 
     
     
               CONTACT:  Rep. Dolores Crow
               Rep. Mike Moyle 
     
                    Phone:         208) 334-1000 
     
     
                                             STATEMENT OF PURPOSE/ FISCAL IMPACT                      H 656