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.)
