Everyone likes a tax cut. However, at what cost? Over the last four years, Idaho’s legislative majority has aggressively slashed income taxes, drastically reducing the State’s ability to invest in essential public services. These tax cuts were pushed through when Idaho was temporarily flush with cash, largely due to federal pandemic relief funds. Now, those funds are gone, and the financial reality is setting in.
Since 2022, Idaho has lost nearly $1.9 billion in revenue due to income tax cuts, and we are projected to lose nearly $948 million every year moving forward. That’s money that could have been used to support public education, healthcare, infrastructure, and property tax relief. Instead, these cuts have disproportionately benefited the wealthiest Idahoans while working families see little relief. The top 1 percent of Idahoans received an average $15,049 tax break, while the average Idaho family saw just $337. This is not real relief, it’s a giveaway to the top at the expense of everyone else.
Recently, Idaho leaders have introduced new rounds of proposed tax cuts that will drain an additional $253 million from state revenues. These include reducing the income tax rate for individuals and corporations from 5.695 percent to 5.3 percent and expanding the income tax exemption. However, tax cuts like this will cost critical public services. In fact, the Joint Finance Committee had to gut $50 million from the transportation budget due to the tax cuts. In addition, the national economy is starting to falter under an administration that continues uncertainty and lack of predictability with self-imposed employment terminations. A recent Idaho Public Policy Survey found that 43 percent of Idahoans believe the state is headed in the wrong direction, with economic concerns, rising costs, and lack of investment in public services being top concerns.
Because of reckless tax policies like these, Idaho is now facing significant funding challenges in areas that impact daily lives. Our public school buildings could have been modernized and repaired. Instead, school districts are forced to rely on local property tax levies to keep the lights on. With $50 million, we could have built 1,100 new affordable housing units to help Idaho families struggling with rising rents. Expanding Medicaid coverage for children and pregnant women would have cost just $27 million, yet families are being denied critical healthcare services while the state gives tax breaks to corporations. Instead, we’re watching housing costs soar while wages fail to keep up.
The Joint Finance-Appropriations Committee is now pushing a bare-bones budget that barely covers basic maintenance and operations for state agencies, public schools, and universities. If we continue down this path, it’s not a matter of if but when we will be forced to cut critical services. These tax cuts are irresponsible and make Idaho’s tax system more regressive, which means middle- and lower-income Idahoans are paying a higher percentage of their income in taxes compared to the wealthiest. Meanwhile, local governments are left scrambling for funds, which means higher property taxes on working families.
Idahoans have been clear about what they want: functional school buildings, safe roads, and affordable healthcare. Instead of reckless, short-sighted tax cuts that benefit the wealthiest at the expense of working families, we need a responsible tax policy that ensures Idaho can invest in its future. That means protecting essential services, providing real tax relief to working Idahoans, and ensuring long-term financial stability so we aren’t forced into austerity measures when the next recession hits. It’s time to stop the cycle of reckless tax cuts and start investing in Idaho’s future. Our state deserves better.
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