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STATEMENT OF PURPOSE
RS26878
Idaho generally conforms to the federal code for the purpose of calculating taxable income. However, given
the short time frame between passage of the federal Tax Cut and Jobs Act (TCJA) and the 2018 Legislative
session, policy makers did not have time to thoroughly review some complex corporate provisions and
did not conform to them. This legislation removes three sections of the Internal Revenue Code (IRC) that
grant corporate deductions from being added back into the calculation of Idaho corporate taxable income.
The result would be to allow the same deductions received at the federal level at the state level regarding
corporate taxation. Each multinational employer with tax liability in Idaho will have a complicated blend
of credits and deductions based on a variety of factors, including where the product was manufactured,
where the product was sold, the tax rates of various countries, and if the foreign earnings generated are
attributable to either tangible (such as cash) or intangible (such as intellectual) property. The legislation
addresses three sections of the IRC that were modified as part of the TCJA in December of 2017. Section 965
addresses deemed repatriation of foreign assets earned between 1986 and 2017 that are generally required
to be declared in tax year 2017, allowing a deduction of between 55 and 77 percent depending on the type of
asset (cash/cash equivalent or non-cash) being declared. Section 250 addresses deductions for both Global
Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) income post 2017.
Even though both acronyms use the term exclusively "intangible," the computations involve both tangible
and intangible assets. Section 245A allows a deduction on repatriated income for companies that already
paid taxes on income earned in a foreign country when it was repatriated to a U.S. company post 2017. The
concept of all these provisions is to incentivize manufacturing and investment inside the United States and
make the United States IRC more competitive on a global scale.
FISCAL NOTE
The impact of allowing the deductions in Sections 965, 250 and 245A should result in net increased revenue
to the state from corporate taxation moving forward because of the requirements of the TCJA. None of this
income is included in revenue projections calculated by the State Economist, and it was not included in any
appropriation calculation for FY2019. The reason is that this income was largely never reported prior to the
TCJA, and so these are largely net new tax sources of revenue for the federal government and Idaho. Over
the next 10 years, based on best assumptions, the revenue projection to the state due to this legislation will
be as follows:
DISCLAIMER: This statement of purpose and fiscal note are a mere attachment to this bill and prepared by a proponent
of the bill. It is neither intended as an expression of legislative intent nor intended for any use outside of the legislative
process, including judicial review (Joint Rule 18).
Statement of Purpose / Fiscal Note H0183
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H463 H183 Net
(2018) (2019) Impact
Sec. 965 (2017 Tax Years Only)
FY 2018 13.6
FY 2019:
Refunds from FY 2018 revenue (60%
deduction) (2.7)
965 (FY 2019 Impact) 18.7
60% deduction for H183 (11.2)
FY 2019 Total 965 Impact 18.7 (13.9) 4.8
FY 2020:
Refunds from FY 2018 revenue (60%
deduction) (5.4)
965 (FY 2020 Impact) 38.1
60% deduction for H183 (22.9)
FY 2020 Total 965 Impact 38.1 (28.2) 9.9
TOTAL 965 70.4 (42.2) 28.2
Sec. 245A (beginning in 2018 tax years)
FY 2019 245A 11.6 (11.6) 0.0
FY 2020 245A 11.6 (11.6) 0.0
FY 2021 245A 11.6 (11.6) 0.0
FY 2022 245A 11.6 (11.6) 0.0
Total 245A 116.0 (116.0) 0.0
GILTI (beginning in 2018 tax years)
FY 2019 GILTI 20.0 (10.0) 10.0
FY 2020 GILTI 20.0 (10.0) 10.0
FY 2021 GILTI 20.0 (10.0) 10.0
FY 2022 GILTI 20.0 (10.0) 10.0
Total GILTI 200.0 (92.5) 107.5
FDII (beginning in 2018 tax years)
FY 2019 FDII 2.4 (9.5) (7.1)
FY 2020 FDII 2.4 (9.5) (7.1)
FY 2021 FDII 2.4 (9.5) (7.1)
FY 2022 FDII 2.4 (9.5) (7.1)
Total FDII 24.0 (95.0) (71.0)
DISCLAIMER: This statement of purpose and fiscal note are a mere attachment to this bill and prepared by a proponent
of the bill. It is neither intended as an expression of legislative intent nor intended for any use outside of the legislative
process, including judicial review (Joint Rule 18).
Statement of Purpose / Fiscal Note H0183
REVISED REVISED REVISED REVISED REVISED REVISED REVISED
FY 2019 52.7 (45.0) 7.7
FY 2020 72.1 (59.3) 12.8
FY 2021 forward 34.0 (31.1) 2.9
Contact:
Senator Brent Hill
Senator Chuck Winder
(208) 332-1000
DISCLAIMER: This statement of purpose and fiscal note are a mere attachment to this bill and prepared by a proponent
of the bill. It is neither intended as an expression of legislative intent nor intended for any use outside of the legislative
process, including judicial review (Joint Rule 18).
Statement of Purpose / Fiscal Note H0183


Statutes affected:
Bill Text: 63-3022