Tax Terms

An adequate tax system raises enough funds to sustain the level of public services demanded by citizens and or mandated by state law or its constitution. The two factors for adequacy are stability and elasticity. Stable taxes grow at a predictable rate making budgeting and planning efficient and effective. Elasticity of taxes is the measure of whether tax revenue increases with the economy thereby providing the means to keep up with demand for increased services.

Exportable taxes are those partially paid by residents of other states.

Flat tax systems tax all payers at the same rate. This system is also sometimes referred to as regressive because an equal tax amount takes a larger proportion of a lower income.

The state’s General Fund is made up of revenues received and not specifically appropriated to any other fund.

A graduated tax system requires higher incomes to pay a higher tax rate than those with lower incomes. The type of tax system is also commonly referred to as a progressive tax system.

Idaho’s grocery tax rebate was first enacted in 1965. The total rebate is capped at $100. For persons not filing a state income tax return, a FORM 24 can be filled to receive the rebate.

NAICS (North American Industry Classification System), cited in the Idaho code refers to the standard classification used by Federal statistical agencies and other government agencies.

A neutral tax system is one that does not attempt to influence economic or other decisions. Neutrality in taxation is also called efficiency in taxation.

Regressive tax systems require that low-and-middle-income families pay a higher share of their income in taxes than upper-income families. Examples would include sales taxes, excise taxes and property taxes.

“Regressive Tax Explained” – http://smallbusiness.chron.com/characteristics-regressive-tax-17562.html

Sales tax applies to the sale, rental, or lease of tangible personal property and some services.

(Idaho State Tax Commission web site - http://tax.idaho.gov/i-1023.cfm)

A structural deficit occurs when the tax structure (sources, rates, etc.) in place is inadequate for raising the revenues necessary to fund the state’s commitments.

A tax expenditure is an item removed from the tax base, generally in the form of a tax exemption, credit, exclusion or deduction. They are used by taxing entities to influence particular outcomes or behaviors.

“Use tax is a tax on goods you put to use or store in Idaho, if you didn’t pay sales tax when the goods were bought and no exemption applies.” (Idaho State Tax Commission website - http://tax.idaho.gov/i-1023.cfm)