Many state legislatures across the country are wrapping up regular sessions, producing a mix of tax breaks and hikes for residents. Idaho taxpayers are among the lucky ones, with a wide variety of tax cuts for individuals and businesses recently signed into law.

West Virginians, however, will see new and extended taxes. Some tobacco products there will soon cost more. And a driving tour across the Mountaineer state won't be any cheaper this summer vacation season. West Virginia's gas excise tax was extended for six more years.

Meanwhile in Illinois, a previously-passed education tax credit has been deemed legal. A state court ruled for the credit in response to parents and teachers who challenged the tax law.

Tax rate cuts, credits for Idaho filers
Idaho businesses and individual taxpayers should find next year's tax bills smaller, thanks to newly enacted tax rate cuts, tax credits and added deductions.

Individual taxpayers will see their rates go from 8.1 percent to 7.8 percent. They also will be able to deduct the cost of health insurance premiums they pay on their Idaho tax forms, as well as deduct 50 percent of the cost of long-term health care coverage.

Idaho's estate tax also gets the same 0.3 percent rate reduction that individual filers now have.

And the state's investors get a break. Taxpayers who sell certain tangible assets in 2001 will be able to exclude 80 percent of their capital gains from state taxation. Currently, 60 percent of such gains is excluded. It will go back to that level in 2002 unless the governor and state lawmakers agree to continue the larger exclusion.

Some philanthropic taxpayers will see the amount they can use as an income tax credit double. Individual taxpayers now get a $50 credit and businesses a $500 credit for charitable contributions to primary and secondary education facilities, libraries, public television, education foundations and university research parks. That credit goes to $100 for individuals and $1,000 for corporations with 2001 taxes.

Idaho companies were not overlooked. The corporate tax drops from 8 percent to 7.6 percent. Business filers also get a new 5 percent tax credit for research and development expenses, with an additional 3 percent tax credit for investment in broadband equipment. And companies that create new jobs in counties with high unemployment or low personal income can apply for an additional tax credit.

Gov. Dirk Kempthorne praised the Idaho legislature at the end of its three-month session for passing a large part of the proposals he submitted to the lawmakers in January. The consensus on tax relief was achieved thanks to an anticipated $300 million surplus for the state's treasury.

Smokeless tobacco, gas taxes approved in West Virginia
Before closing out its regular session April 14, the West Virginia legislature approved a new tax on smokeless tobacco and extended the state's current gasoline tax. Both bills have gone to Gov. Bob Wise, who is expected to sign them.

The Smokeless Tobacco Tax had strong backing from state lawmakers and the governor. Under the bill, a 7 percent tax will be added to the wholesale price of chewing tobacco and snuff. The measure should increase the West Virginia treasury. In addition, bill supporters hope it will act as an economic deterrent, especially for young people, to the purchase of non-cigarette tobacco products.

West Virginia's current state tax rate of 20.5 cents per gallon on gasoline also should continue for six more years. The tax rate has been in effect since 1993 but was due to expire Aug. 1. Wise had sought continuation of this levy, and the state House and Senate finally agreed just days before the session ended. Wise supported the extension and is expected to sign the bill into law.

It wasn't a total victory for the governor, however. Wise had requested the gas tax be made permanent, but West Virginia lawmakers opted instead to extend the gas tax only until Aug. 1, 2007.

Illinois education credit upheld
The validity of a year-old Illinois education tax credit has been affirmed by an appeals court, which found the tax break did not improperly send tax dollars to private and religious schools. Rather, according to the ruling, the tax break allows taxpayers more control over their money before the state collects it and is available to help pay for both private and public schooling costs.

A public school teacher and a parent of children attending public school had filed suit seeking the Illinois' Education Expense Credit Act be declared unconstitutional. They contended the credit allows tax money to be used in support of religious education and gives preferential tax treatment to parents who send children to religious schools.

The disputed credit became available to Illinois taxpayers in 2000. Beginning that tax year, parents could claim up to $500 against their state income tax bill for a portion of qualified education expenses they paid for a dependent child's schooling, kindergarten through grade 12 at any public or nonpublic school that met federal Civil Rights Act requirements.

A lower county court dismissed the claims. The state's Fifth Circuit appellate court agreed with the county court, saying the credit at issue does not involve any appropriation or use of public funds. "No money ever enters the state's control as a result of this tax credit," wrote Judge Loren P. Lewis. "Rather, the Act allows Illinois parents to keep more of their own money to spend on the education of their children as they see fit and thereby seeks to assist those parents in meeting the rising costs of educating their children.

"The Act has the secular purpose of ensuring that Illinois children are well educated," Lewis added. "Maintaining the financial health of private schools is also of importance as such schools relieve taxpayers of the burden of education for private school students. More importantly, the credit is equally available to all parents of public or nonpublic school children. Funds become available to schools only as the result of private choices made by individual parents."

-- Posted: April 19, 2001