The recent analysis of the end-of-session tax proposal by the left-wing Idaho Center for Fiscal Policy ignored the positive, pro-taxpayer impact of the proposal, and it provided incorrect and erroneous data. The center claims that only those in the top 20 percent of earners (those making in excess of $93,800 annually) will benefit, but the math used to reach this conclusion is fundamentally flawed.
For example, the report claims the existing grocery tax credit is a larger benefit for the lowest 40% of earners than is eliminating the sales tax on groceries, but this specious claim ignores relevant data from the US Department of Agriculture (USDA). Even by the USDA's most conservative estimates (the "thrifty" plan), an average adult would see a positive impact of $64 per year and an average family of four would see a positive impact of $73 per year. Under a more realistic "moderate" budget estimate, the savings would be $105 and $375 respectively.
Even when these savings are partially diminished by the increase in the tax on motor fuel and by a slight increase in income tax for some earners, a significant majority of Idahoans will benefit from this tax proposal. A typical family of four with an income of $40,000 annually or less will see no increase in their income tax and will have the increase in the tax on motor fuel more than offset by the elimination of the sales tax on groceries.
"The positive impact of eliminating the sales tax on groceries and repealing the grocery tax credit will only grow as food prices continue to increase," said IFF President Wayne Hoffman.
The grocery tax credit has reached its statutory cap and is not indexed to inflation, but food prices will continue to increase nonetheless.
"The net impact of this tax proposal will be to reduce the tax burden of many Idahoans, to fund needed road maintenance and improvements, and to positively benefit Idaho's economy both today and in the future," Hoffman concluded.
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