Idaho Considers Cutting Grocery Credits For Its Poorest Residents As Budget Fix

As they attempt to grapple with budgets decimated by the Great Recession, lawmakers in states across the country have largely chosen one of two tracks. Some, like Wisconsin and Oregon, have paired spending reductions with responsible revenue increases — asking their wealthiest citizens and businesses to sacrifice a bit so that vital programs can be preserved — while others, like New Jersey and Virginia, have slashed social safety net spending to the bone and adamantly refused to find additional revenue.

According to the Idaho Statesman’s Dan Popkey, Idaho legislators have a slew of options on the table for dealing with their 2011 budget shortfall, including raising the state’s “relatively low tobacco and beer and wine taxes.” But one other option that Popkey reports is under contemplation is cutting tax credits that help Idaho’s poorest residents afford food:

One possibility, though no legislators want their name on it yet: Ending the grocery-tax credit, which saves taxpayers $100 million. That would mean conflict because it would hit the poor hardest during hard times.

The credit is intended to refund some of the state’s sales tax to its poorest residents, as, unlike in many other states, the Idaho sales tax is levied on groceries. In an editorial, the Lewison Morning Tribune slammed the notion of cutting grocery credits, writing that “when it’s time to cut taxes, it’s Idaho’s wealthiest who get the breaks. When there’s a tax to be paid, it’s the people on the bottom rungs who get soaked.”


And Idaho already has an inequitable tax system, with its richest five percent of taxpayers paying a small percentage of their income in taxes than any other segment of its population. In fact, someone in the richest one percent pays more than two percentage points less, on average, than someone in the poorest 20 percent of the state. But, aside from maybe raising sin taxes, it doesn’t seem that other revenue increases are in the cards. “There’s no appetite for a general tax increase,” said the state’s House Assistant Leader, Scott Bedke (R).

Citizens for Tax Justice wrote that “limiting the grocery credit to low- and moderate-income households, those who are most impacted by the regressive nature of the sales tax, is a smarter approach than outright eliminating the credit.” But given Idaho’s regressive system, an income tax on the very wealthiest earners would be an even more equitable way to raise some revenue without taking food out of the mouth’s of the state’s poorest residents.