Dems outline opportunity cost of $600 million tax cut. Grocery tax is most important

Bryan Clark
·3 min read

With a massive Republican-backed income tax proposal already through the House, the Legislature’s Democrats held a press conference Thursday to detail how they would use the $600 million the cut would cost.

Their proposals include:

  • Repealing the grocery tax, $196 million

  • Making the child tax credit refundable, $20 million

  • Funding EMS in underserved communities, $4 million

  • Increase the property tax assistance program, $30 million

  • Send funding to local schools to pay off bonds and levies, $250 million

  • Distribute internet sales tax funds to local governments, $100 million

The Democrats’ counter-proposal isn’t perfect. For example, people with so little income that they don’t file tax returns wouldn’t receive the refundable child tax credit. Many of Idaho’s poorest kids already don’t benefit from the child tax credit for this reason, and the Democrats’ bill would not fix the underlying problem.

The two visions for tax cuts are nonetheless quite distinct, and Rep. Ilana Rubel, D-Boise, is right to point out that the real question is opportunity cost. Cutting $600 million in income taxes places limits on what is possible now and in the future. Few of the Democrats’ proposals are possible if the income tax cut passes.

So Idahoans should know the cost of the income tax cut. One clear cost, and the worst, is that they will continue to pay 6% more than they otherwise would on groceries.

The common response from supporters of an income tax cut is that there is a grocery tax credit to partially offset what Idahoans pay for groceries.

For families living paycheck to paycheck, the grocery tax credit comes too late. You can’t pay for food in January with a check you get in May. Eliminating the tax translates to an immediate 6% reduction in the cost of food. And for food-insecure families, that difference is enormous.

Eliminating the grocery tax would also easily answer Rep. Mike Moyle’s rhetorical dilemma: How can you give tax relief to a family that doesn’t pay much in taxes? The answer: cut the taxes they are paying lots of (sales taxes), not the taxes they don’t pay much of (income taxes).

So don’t forget the promises the GOP made when they passed this year’s income tax cut — in a year where it was easier than it is likely to ever be again to make a big impact on your life.

When an individual making $30,000 per year gets their tax refund, it will be a bit bigger, maybe enough for gas on an extra weekend road trip. They’ll also get a small one-time check, maybe enough to cover meals on that trip. That trip will be their share of the $1.9 billion surplus.

Meanwhile, the richest guy in their town might get enough to buy another boat.

Was that trip worth paying more for food for the rest of the year? And think about those even worse off, who spend most of their money on food or rent, who therefore continue to pay taxes on almost all of their income.

Was the trade-off worth it for them?