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Plan would increase tax breaks for donating to schools and some state agencies

Plan would increase tax breaks for donating to schools and some state agencies

Idaho Freedom Foundation staff
March 8, 2010

An Idaho House panel approved a plan that would give Idaho taxpayers a higher tax credit for donating to public or private schools as well as some state agencies facing reduced state funding. Gov. Butch Otter is sponsoring the tax credit extension, which would last for five years. The proposed legislation said it could help schools and agencies, but could reduce state tax revenues by $5 million a year

“It is a proactive tool that has been proven successful,” said Jason Kreizenbeck, the governor’s chief of staff. “It does not compel any agency to go out and do private fundraising.”

The House Revenue and Taxation Committee Monday approved sending the measure to the House. The proposal would increase the tax credit fivefold on donations to public or private schools and universities, libraries, museums, the Idaho State Historical Society, and Idaho Public Television. It would also extend that higher credit to agencies that had been targeted for removal by the governor in his budget plan. That includes the Idaho Commission of Hispanic Affairs, the Idaho Commission for the Blind and Visually Impaired, the Idaho Council on Developmental Disabilities, the Idaho State Independent Living Council, and the Idaho Council for the Deaf and Hard of Hearing. “One of the things we tried to do was provide them with an incentive to see if the people that had an interest in those areas wanted to help support it,” Kreizenbeck said. He said some state agencies can already receive donations, but this could help all the targeted agencies in the future.

Taxpayers would get a tax credit of 50 percent of the contribution, which could count for half of their total state income tax liability. The maximum credit would increase from $100 to $500 for individual taxpayers, and from $200 to $1,000 on jointly filed returns.

Sen. Brent Hill, R-Rexburg, said the tax credits could reduce the state general fund an estimated $5 million a year, but that the schools and agencies receiving funding would see a $10 million increase. He compared the benefit to a slot machine that paid out 50 cents every time you put in a quarter. “It would be crazy for us not to participate in something like that,” Hill said. He also said donors could only give money, not old computers or cars, to get the additional tax credit. “As the limits get bigger, the temptation to abuse something like this grows as well,” he said.

The measure now heads to the full House for a vote. The text of the legislation is available here.

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