Significant tax relief and restoration of loser pays attorney fees highlight small-business achievements
The 2018 half of the 64th Idaho Legislature adjourned March 28 with some important accomplishments for small business.
Won Significant Tax Relief
- House Bill 463 conforms Idaho law to federal law for 2018 and future years; revises the calculation of net operating loss, of net taxable income for corporations; reduces the individual and corporate income tax rates and provides for a child tax credit. NFIB lobbied for this conformity and for simplicity of tax compliance worth $142 million in tax relief to individuals and businesses in the state and a $205 new child tax credit for eligible children.
- H355 conforms Idaho tax code for the tax year 2017 to federal law, with limited provisions specific to Idaho tax law. NFIB encouraged the Idaho legislature to conform to federal tax law to align state and federal provisions, for simplicity and tax compliance.
- H335 cuts unemployment insurance rates cut by reducing the taxable wage rate fund size multiplier from 1.5 to 1.3 and authorizes the Labor Department Director to adjust the taxable wage rates under certain circumstances. Estimated to save employers $120 million over three years, H335 was the first bill of the 2018 session. Fast-tracked for early passage, it was sent to Gov. Butch Otter following unanimous approval by both the House and the Senate. The bill, retroactive to Jan. 1, 2018, is projected to save businesses $41 million in this year alone. NFIB State Director Suzanne Budge testified in support of the bill, which is expected to reduce unemployment taxes by 30 percent. The rate change maintains adequate reserves in the UI fund, which has more than $700 million and is on track to be above and beyond what the federal government recommends, starting this year.
- Small businesses will also benefit from a workers’ compensation rate drop due to the federal Tax Cuts and Jobs Act. Idaho’s workers’ compensation rates will decrease by 3.4 percent effective May 31, and this follows a 5.8 percent decrease on January 1, 2018. The National Council on Compensation Insurance (NCCI) made filings in five states, including Idaho, for rate reductions due to the new federal tax law. The law reduced the corporate tax rate from 35 percent to 21 percent, prompting NCCI to make the “law only” filing. The federal tax cut affects the profit and contingency provision of the workers’ compensation rate, as well as the tax treatment of underwriting income, the post-tax return on investment, and the post-tax cost of debt capital. NFIB State Director Suzanne Budge serves on an NCCI committee on behalf of small business.
Protected Private Property Rights
- H447 revises which property is subject to civil forfeiture and protects property that does not have a meaningful connection to trafficking crimes. NFIB supported protections of private property in 2017 when the bill was vetoed and again in 2018.
- H658 amends civil, criminal, and hunting laws regarding trespassing on private property to make them more uniform in three key areas: posting requirements, penalties and damage awards, and exceptions to the trespass laws. NFIB has always supported private property as a fundamental constitutional right.
Secured Transparency and Good Government
- H606 amends the Open Meetings Law to including public agencies established by executive order of the governor.
- H611 requires meeting agendas for government entities be posted online if that entity has an online presence and requires that “action items” be labeled on the agenda. NFIB supports more transparency in government including proper public notice of actions that impact citizens and taxpayers.
Increased Health Insurance Access
Senate Bill 1288 provides that foreign insurers licensed to sell individual or group accident and sickness insurance in another state may offer and sell individual or group accident and sickness insurance in Idaho as long as the coverage meets Idaho’s insurance laws. NFIB supports selling across state lines to provide wider access to more affordable insurance plans
From the 2017 half
Won Loser Pays Rule for Frivolous Lawsuits
With strong backing from NFIB, House Bill 97 restores in state statute the rule of making the losing party who brought a frivolous lawsuit also pay the attorney fees of the defendant. This restoration overrides recently modified Idaho Supreme Court Rules. H97 passed the House 61-8, passed the Senate 34-1, and was signed by Gov. Butch Otter. NFIB is part of Idaho Liability Reform Coalition. A frivolous lawsuit is no small matter for small businesses which often have to consider settling an unfair claim on them in order to avoid paying further attorney costs.
Defeated Minimum-Wage Increase
NFIB reminded legislators of the minimum wage’s central role in serving as an entry-level wage for teens and young adults starting out on their working lives and the damage done to those opportunities when minimum-wage rates are increased. For the small minority of minimum-wage workers not still living at home, increasing the rate lifts no one out of poverty. House Bill 72 would have increased the minimum wage annually from its current $7.25 per hour to $8.75 (7-1-17), $10.50 (7-1-18), $12.00 (7-1-19), and, in 2020, indexes the wage increase thereafter to the Consumer Price Index. The bill did not get a hearing in the House.
Secured Balanced State Budget Without Raising Taxes
Balancing the state budget is every legislature’s No. 1 job in the nation. Doing so without further burdening every state’s top job-creators, small-business owners, is the trick, which, with a constant reminder from NFIB, Idaho’s lawmakers managed to pull off.
Secured Stable Local Government Spending
Cities, counties, and special taxing districts are limited by state law to no more than a 3 percent increase in their budgets every year. House Bill 207 now gives them the flexibility to set a budget less than 3 percent but also allows them the ability to release any forgone balances so they are not added to future budgets, which keeps a rein on government spending and higher property taxes. With the support of NFIB, H207 passed the House 65-4 and passed the Senate 27-8 and was signed by the governor.