Eight Scenarios under House Bill 311

Eight Scenarios under House Bill 311

by
Parrish Miller
March 31, 2015
Parrish Miller
March 31, 2015

The projected impact of reducing Idaho's income tax to a flat rate of 6.7 percent for those above a certain threshold, of repealing the sales tax on groceries and the grocery tax credit, and of increasing the motor fuels tax by seven cents a gallon.

Scenario #1:

Tom is a single, 28-year-old male. He is not in college, disabled, or blind. He has an annual income of $40,150. After subtracting the standard deduction and personal exemption ($10,150), his taxable income is $30,000. Under Idaho's current tax system, he would pay $1,975 in state income tax. Under this proposal, his income tax would increase slightly to $2,010. (-$35)

Tom spends $250 a month on groceries. Under Idaho's current tax system, he would pay $180 in sales tax on groceries, $100 of which would be offset by the grocery tax credit. Under this proposal, he would save $80 on groceries by not having to pay sales tax. (+$80)

Tom drives around 12,000 miles a year in a car which averages 24 miles to the gallon. Under Idaho's current tax system, he would pay $125 annually in motor fuels tax. Under this proposal, he would pay $160 annually in motor fuels tax. (-$35)

Overall, Tom saves $10 annually under this proposed tax law change.

 

Scenario #2:

John and Jane are a married couple with no children. They are not in college, disabled, or blind. Together they have an annual income of $68,300. After subtracting the standard deduction and personal exemptions ($20,300), their taxable income is $48,000. Under Idaho's current tax system, if they file a joint tax return, they would pay $3,061 in state income tax. Under this proposal, their income tax would increase slightly to $3,216. (-$155)

John and Jane spend $600 a month on groceries. Under Idaho's current tax system, they would pay $432 in sales tax on groceries, $200 of which would be offset by the grocery tax credit. Under this proposal, they would save $232 on groceries by not having to pay sales tax. (+$232)

John and Jane drive around 20,000 miles a year in their vehicles which average 22 miles to the gallon. Under Idaho's current tax system, they would pay $227 annually in motor fuels tax. Under this proposal, they would pay $291 annually in motor fuels tax. (-$64)

Overall, John and Jane save $13 annually under this proposed tax law change.

 

Scenario #3:

Susie is a 32-year-old single mother of two; not in college, disabled, or blind with an annual income of $54,950. She will fill as a 'head of household.' After subtracting the standard deduction and three exemptions ($20,950), her taxable income is $34,000. Under Idaho's current tax system, she would pay $2,025 in state income tax. Under this proposal, her income tax would increase to $2,278. (-253)

Susie spends $800 a month on groceries. Under Idaho's current tax system, she would pay $576 in sales tax on groceries, $300 of which would be offset by the grocery tax credit. Under this proposal, she would save $276 on groceries by not having to pay sales tax. (+$276)

Susie drives around 8,000 miles a year in a car which averages 28 miles to the gallon. Under Idaho's current tax system, she would pay $71 annually in motor fuels tax. Under this proposal, she would pay $91 annually in motor fuels tax. (-$20)

Overall, Susie comes out even, saving $3 annually under this proposed tax law change.

 

Scenario #4:

Jack and Jill are a married couple with two children. They are not in college, disabled, or blind. Together they have an annual income of $88,200. After subtracting the standard deduction and four exemptions ($28,200), their taxable income is $60,000. Under Idaho's current tax system, if they file a joint tax return, they would pay $3,949 in state income tax. Under this proposal, their income tax would increase slightly to $4,020. (-$71)

Jack and Jill spend a relatively modest $750 a month on groceries. Under Idaho's current tax system, they would pay $540 in sales tax on groceries, $400 of which would be offset by the grocery tax credit. Under this proposal, they would save $140 on groceries by not having to pay sales tax. (+$140)

Jack and Jill drive around 22,000 miles a year in their vehicles which average 24 miles to the gallon. Under Idaho's current tax system, they would pay $229 annually in motor fuels tax. Under this proposal, they would pay $293 annually in motor fuels tax. (-$64)

Overall, Jack and Jill save $5 annually under this proposed tax law change.

 

Scenario #5:

Bill and Sara are a married couple with four children. They are not in college, disabled, or blind. Together they have an annual income of $86,100. After subtracting the standard deduction and four exemptions ($36,100), their taxable income is $50,000. Under Idaho's current tax system, if they file a joint tax return, they would pay $3,209 in state income tax. Under this proposal, their income tax would increase to $3,350. (-$141)

Bill and Sara spend $1,200 a month on groceries. Under Idaho's current tax system, they would pay $864 in sales tax on groceries, $600 of which would be offset by the grocery tax credit. Under this proposal, they would save $264 on groceries by not having to pay sales tax. (+$264)

Bill and Sara (along with their 16-year-old daughter) drive around 30,000 miles a year in their three vehicles which combined average 20 miles to the gallon. Under Idaho's current tax system, they would pay $375 annually in motor fuels tax. Under this proposal, they would pay $480 annually in motor fuels tax. (-$105)

Overall, Bill and Sara save $18 annually under this proposed tax law change.

 

Scenario #6:

Parrish is a single, 29-year-old male; not in college, disabled, or blind with an annual income of $40,150 (because his nice boss gave him a much appreciated raise.) After subtracting the standard deduction and personal exemption ($10,150), his taxable income is $30,000. Under Idaho's current tax system, he would pay $1,975 in state income tax. Under this proposal, his income tax would increase slightly to $2,010. (-$35)

Parrish spends only $200 a month on groceries because he eats out a lot and never buys vegetables. Under Idaho's current tax system, he would pay $144 in sales tax on groceries, $100 of which would be offset by the grocery tax credit. Under this proposal, he would save $44 on groceries by not having to pay sales tax. (+$44)

Parrish drives around 4,000 miles a year in his Ford Focus which averages 28 miles to the gallon and he rides 8,000 miles a year on his Honda Forza which averages 60 miles to the gallon. Under Idaho's current tax system, he would pay $69 annually in motor fuels tax. Under this proposal, he would pay $88 annually in motor fuels tax. (-$19)

Overall, Parrish loses $10 annually under this proposed tax law change.

 

Scenario #7:

Jeff and Veronica are a retired couple in their late 60s. They are not disabled or legally blind. Mike gets $14,000 per year in social security and $30,000 a year in retirement. Susan gets $12,000 per year in social security. Combined, their annual fixed income is $56,000. Social security is not taxable in Idaho so that is subtracted as is $22,700 in deductions and exemptions, and $1,300 in supplemental medical insurance. That leaves Mike and Susan with taxable income of $6,000. Under Idaho's current tax system, they would pay $161 in state income tax. Under this proposal, their income tax will remain $161. ($0)

Jeff and Veronica spend a moderate $600 a month on groceries. Under Idaho's current tax system, they would pay $432 in sales tax on groceries, $240 of which would be offset by the grocery tax credit. Under this proposal, they would save $192 on groceries by not having to pay sales tax. (+$192)

Jeff and Veronica drive around 16,000 miles a year in their vehicles which average 22 miles to the gallon. Under Idaho's current tax system, they would pay $182 annually in motor fuels tax. Under this proposal, they would pay $233 annually in motor fuels tax. (-$51)

Overall, Jeff and Veronica save $141 annually under this proposed tax law change.

 

Scenario #8:

Mike and Susan are a retired couple in their late 60s. They are not disabled or legally blind. Mike gets $16,000 per year in social security and $30,000 a year in retirement. Susan gets $11,000 per year in social security and $20,000 a year in retirement. Combined, their annual fixed income is $77,000. Social security is not taxable in Idaho so that is subtracted as is $22,700 in deductions and exemptions, and $1,300 in supplemental medical insurance. That leaves Mike and Susan with taxable income of $26,000. Under Idaho's current tax system, they would pay $1,433 in state income tax. Under this proposal, their income tax would increase to $ 1,742. (-$309)

Mike and Susan spend $700 a month on groceries. Under Idaho's current tax system, they would pay $504 in sales tax on groceries, $240 of which would be offset by the grocery tax credit. Under this proposal, they would save $264 on groceries by not having to pay sales tax. (+$264)

Mike and Susan drive around 10,000 miles a year in their vehicles which average 24 miles to the gallon. Under Idaho's current tax system, they would pay $104 annually in motor fuels tax. Under this proposal, they would pay $133 annually in motor fuels tax. (-$29)

Overall, Mike and Susan lose $74 annually under this proposed tax law change. (This represents less than 1/10 of 1 percent of their annual income.)

 

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