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H0686...............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - Add to existing law to provide an income tax credit for
any individual or corporate taxpayer who donates money in the support of a
child at the elementary or secondary school level who is being educated in
Idaho, but outside the public school system.
02/24 House intro - 1st rdg - to printing
02/25 Rpt prt - to Rev/Tax
H0686
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 686
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAX CREDITS; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY
3 THE ADDITION OF A NEW SECTION 63-3029G, IDAHO CODE, TO PROVIDE A SCHOOL
4 CHOICE TAX CREDIT; AND PROVIDING AN EFFECTIVE DATE.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is
7 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
8 ignated as Section 63-3029G, Idaho Code, and to read as follows:
9 63-3029G. SCHOOL CHOICE TAX CREDIT. (1) The purpose of this section is
10 to relieve the financial and enrollment pressures within the Idaho public
11 school system by allowing any individual or corporation which files an Idaho
12 state income tax return to receive a credit against taxes due when the indi-
13 vidual or corporation donates money directly to the parents or legal guardian
14 of a child who is not enrolled in a public school but who is otherwise in com-
15 pliance with the compulsory school attendance requirements of section 9, arti-
16 cle IX, of the constitution of the state of Idaho and section 33-202, Idaho
17 Code. It is the responsibility of the parent or legal guardian to maintain
18 accurate records of the financial support received for each child so that
19 donations received do not exceed the limits established herein for claiming
20 income tax credits.
21 (2) For taxable years commencing on and after January 1, 2001, there
22 shall be allowed, at the election of the taxpayer and subject to the limita-
23 tions provided herein, a credit against the income tax imposed by the provi-
24 sions of this chapter for monetary donations made to a parent or legal guard-
25 ian in support of his child who is being educated at the elementary or second-
26 ary level outside the public school system as follows:
27 (a) For individual tax returns where the taxpayer elects to compute the
28 credit using a specific dollar amount: two hundred fifty dollars ($250)
29 for each of the taxable years 2001 and 2002; five hundred dollars ($500)
30 for each of the taxable years 2003 and 2004; seven hundred fifty dollars
31 ($750) for taxable year 2005; and one thousand dollars ($1,000) for tax-
32 able year 2006 and for each year thereafter; or
33 (b) For individual tax returns where the taxpayer elects to compute the
34 credit using a percentage of his tax liability: five percent (5%) for each
35 of the taxable years 2001 and 2002; seven and one-half percent (7.5%) for
36 each of the taxable years 2003 and 2004; ten percent (10%) for taxable
37 year 2005; and twelve and one-half percent (12.5%) for taxable year 2006
38 and for each year thereafter.
39 (c) For corporate tax returns where the taxpayer elects to compute the
40 credit using a specific dollar amount: one thousand dollars ($1,000) for
41 each of the taxable years 2001 and 2002; two thousand five hundred dollars
42 ($2,500) for each of the taxable years 2003 and 2004; five thousand dol-
43 lars ($5,000) for taxable year 2005; and ten thousand dollars ($10,000)
2
1 for taxable year 2006 and for each year thereafter; or
2 (d) For corporate tax returns where the taxpayer elects to compute the
3 credit using a percentage of his tax liability: five percent (5%) for each
4 of the taxable years 2001 and 2002; seven and one-half percent (7.5%) for
5 each of the taxable years 2003 and 2004; ten percent (10%) for taxable
6 year 2005; and twelve and one-half percent (12.5%) for taxable year 2006
7 and for each year thereafter.
8 (3) The parent or legal guardian shall not accept monetary donations in
9 support of each eligible child's nonpublic school education in excess of fifty
10 percent (50%) of the previous year's general maintenance and operations expen-
11 ditures per average daily attendance (ADA) as determined by the department of
12 education. For special needs students, the parent or legal guardian shall not
13 accept monetary donations in excess of sixty-five percent (65%) of the previ-
14 ous year's general maintenance and operations expenditures per average daily
15 attendance (ADA). The donations made by a parent or legal guardian of a child
16 in support of his child's nonpublic school education are allowable and may be
17 taken as a credit on the parent or legal guardian's income tax return as pro-
18 vided in this section, but such contributions shall also count against the
19 total allowable amount as specified in this subsection.
20 (4) Notwithstanding the provisions of subsection (2) of this section, the
21 amount of the credit allowed shall not exceed forty percent (40%) of the tax
22 liability of the taxpayer.
23 (5) It is the intent of the legislature to initially limit the number of
24 students on whom the tax credit may be claimed. For tax year 2001, the credit
25 may be claimed only on qualifying students who attained seven (7) years of age
26 in tax year 2001. For each succeeding tax year, the student shall have
27 attained seven (7) years of age in the tax year claimed, or shall have first
28 qualified or could have qualified, in tax year 2001.
29 (6) In the event there is a change in eligibility status of a child due
30 to a move from a private educational setting to a public one, or due to a move
31 away from the state of Idaho, the parent or legal guardian of the child on
32 whom tax credits were taken shall adjust his tax return to reflect the number
33 of calendar months the child was educated in Idaho but outside the public
34 school system. If a tax liability results, the liability shall attach to the
35 parent or legal guardian of the child on whom the credits were taken.
36 (7) If the credit is not claimed for the year in which the individual or
37 corporate income tax return is filed, the right thereafter to claim such
38 credit shall be forfeited.
39 (8) As an inducement to relieve the financial and enrollment pressures in
40 public schools, a school district may make a monetary donation to an enrolled
41 child's parents or legal guardian to transfer the child to a private or home
42 school. The amount which a school district may donate shall not exceed fifty
43 percent (50%) of the previous year's general maintenance and operations expen-
44 ditures per average daily attendance (ADA). For special needs children, the
45 amount may not exceed sixty-five percent (65%) of the previous year's general
46 maintenance and operations expenditures per average daily attendance (ADA).
47 (9) The state tax commission shall provide forms for computing the tax
48 credit. The form shall include the name, address, private school attended, or
49 verification of home study, and social security number of the child on whom
50 the credit is being taken. The form shall also include the name, address and
51 social security number of the parent or guardian of the child.
52 (10) No parent or legal guardian of a home-schooled child and no educa-
53 tional institution shall, on account of educating a child on whom a tax credit
54 is claimed under the provisions of this section, be considered a recipient of
55 governmental financial assistance for the purpose of imposing any rule, guide-
3
1 line, order, requirement or regulation upon such parent, guardian, home school
2 or educational institution, or for any other purpose.
3 (11) The state tax commission shall compile a report each year which
4 includes the number of returns on which this credit was taken, the total
5 amount of tax credited, and the number of students on whom the credit was
6 taken.
7 SECTION 2. This act shall be in full force and effect on and after Janu-
8 ary 1, 2001.
STATEMENT OF PURPOSE
RS 09725
School choice: Education Tax Credits
The purpose of this legislation is to relieve the financial and enrollment
pressures within the Idaho Public School system by allowing any individual or
business entity who pays state income or corporate income tax to take a tax credit
when they directly donate money to an eligible child who is not enrolled in public
school.
This is a pilot program phased-in over 12 years. The first year, only first
grade children not enrolled in Public School are eligible to collect donations. The
second year, only first and second grade children not enrolled in Public School are
eligible. The third year, only first, second and third graders are eligible... and so
on for twelve years.
Individuals and businesses have a choice on their donation caps. They can
select a fixed monetary cap or a percentage schedule. In no case can the donations
exceed 40% of the donors overall state tax liability.
The eligible child can only collect donations up to 50% of the previous
year's General Maintenance and Operations expenditures per Average Daily
Attendance as determined by the Dept. of Education. (1998: M&O ADA was
$4493 x 50% = $2246)
To insure constitutionality, this legislation was fashioned using the Idaho
Attorney General's Opinion 97-2. Donations flow to the child, not to the private
school. Further, this is tax legislation and will be enforced by Idaho State Tax
Commission.
There are provisions that account for movement in and out of public and
private schools; also, for movement when students migrate in and out of state.
FISCAL IMPACT
The total estimated number of private and home schooled students in
Idaho for the year 2001 is 13,119 of which 7% will be first graders
equaling 918 total eligible the first year of the pilot program. 50% of the
previous year's M&O ADA is estimated to be $2430 equaling a maximum
impact to the general fund of $2.23 million.
Public school districts will be relieved of a $4.46 million teaching
liability while retaining $2.23 million in 2001.
In 2002, estimates for total first and second grade eligible students are
1,873. The M&O ADA multiplier is $2,527 equaling $4.73 million.
In 2003, estimates 1st-3rd eligible students at 2,798 x M&O ADA ($2628)
equaling $7.35 million.
Contact
Name: Representative Lenore Barrett
Phone: (208) 332-1000
Name: Laird Maxwell, Idahoans for Tax Reforms
Phone: (208) 331-1996
STATEMENT OF PURPOSE/FISCAL NOTE H686