Reclaim Idaho’s Latest Effort is a Bridge Too Far

Recently, I entered a twitter discussion with Luke Mayville, Director of Reclaim Idaho over their Idaho Education Initiative. At first blush to an Idaho voter, this might seem like a great idea. Tax those ultra-wealthy people because they don’t pay their fair share. Lost in this conversation was the understanding that a good share of businesses in this state gets taxed under the individual, not corporate tax rates. Any individual making over $250,000 per year gets to pay 9.925% with an adjusted increase based on the consumer price index (CPI) each year. If we averaged the CPI based on what it has been over the past 10 years, the tax rate in 10 years from now would be 11.83%.

Reclaim Idaho doesn’t suggest every tax bracket increase by the CPI only those in the $250,000 and over bracket? I ran a little scenario of my own to see how all this works. If I have an income of $525,000 per year, I will pay $194,250 in Federal Income Tax, $36,356 for the current Idaho Income Tax rate of 6.925%, and $8,250 for their increased tax rate proposal on all income over the $250,000 threshold. If I give donations to my community and church (most would not be deductible because I would be in an upper tax bracket) of $52,500, I live off of $100,000 and pay my mortgage principal portion of $128,953, There would be a whopping $4,690.75 remaining. Here is the catch that most people don’t understand… PRINCIPAL PAYMENTS ON NON-DEPRECIABLE ASSETS AND CAPITAL INVESTMENTS HAVE TO BE MADE WITH AFTER TAX DOLLARS! In 10 years with the CPI that additional tax moves up to $13,488. Even if my income stays the very same.

A W-2 wage earner, although taxed in the same way as a small business owner, could spend all their money after it is taxed. They could use all their disposable income on whatever they desire, having no responsibility to plow that money back into a business. Business owners don’t have that same luxury. If they fail to put a portion of that money back into their business, they will have no business. Small business is the lifeblood of the Idaho economy.

Reclaim Idaho assumes that throwing more money at education will make it better. What Reclaim Idaho really needs to do is look at how they can affect change in improving students’ lives. According to the National Institutes of Health, children do best when they have a stable home, structure, parents that are engaged in their lives, and access to books and learning materials. Our focus as a society should be on promoting good homes and engaged parenting. Maybe even tax incentives that promote strong stable homes. Money doesn’t solve all problems.

Mandates are offensive to those who work hard to build their business. How about Reclaim Idaho ask the state to add a line item to the Idaho State Income Tax form so that people can voluntarily add more money to education? They can give a dollar amount or even a percentage of their income. This creates the ability by those feeling that the education system has been short-changed to put their money where their mouth is. Providing taxpayers a choice to contribute more to education enables business owners to become more invested in our children’s future when and if they can be based on their financial situation. Just because someone makes a certain amount on paper, does not translate into discretionary money. Not all businesses are equal and often debt, business expenses, and employment costs make it harder for people that fall into Reclaim Idaho’s definition of privilege to actually have the money to contribute above what is needed to keep their business viable.

Reclaim Idaho is like other non-profit political organizations that rely on donor money. They are not worried about creating jobs or turning a profit and lack a full understanding of what it takes to create a sustainable business.

Reclaim Idaho is trying to short-change the voters in this state by doing an end-run with the courts around the initiative process. They had plenty of time before COVID slowed down their gathering of signatures for their initiative. They are disrespectful of the rule of law that was intended to protect citizens of Idaho. The courts, at the petition of Reclaim Idaho, have now thrown out the requirement of in-person signatures and they can collect them online.

Voters in Idaho need to think long and hard about this issue before signing their name to a slogan and a promise from Reclaim Idaho. This is an oversimplification of a complex problem that will likely do more harm than good to our state.

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