House

Bill 633
2016 Freedom Index Score (-2)
Analyst: Lindsay Russell Dexter
Date: March 21, 2016
House Bill 633
Freedom Index Score (-2)
Analyst: Lindsay Russell Dexter
March 21, 2016

ANALYSTS NOTE: House Bill 633 does two things. First, it reduces individual and corporate income tax
rates by 0.1 percent. These tax breaks were previously addressed in House Bill 380, which has stalled in
the House Local Government and Taxation committee. Second, HB 633 will impose a sales/use tax on
retailers that sell in Idaho, but may not have a physical presence. This provision was previously submitted
in House Bill 581. House Bill 633 combines House Bill 380 and 581.

Point No. 3: Does it give government any new, additional, or expanded power to prohibit, restrict, or
regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in
the market?

ANALYSIS: The bill creates vast new categories of businesses that might be considered to have
"sufficient contact with the state ... to require the seller to collect and remit use tax on sales of
tangible personal property or services" in the state of Idaho. In analyzing whether a business
meets the criteria for having to collect use-taxes, the tax commission will review a retailer's
business interactions in ways never before contemplated, including social media presence, text
messages, marketing campaigns, and the existence of employees in the state. (-1)

Point No. 5: Does it directly or indirectly create or increase any taxes, fees, or other assessments?
Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

ANALYSIS: The result of HB 633 would be the imposition of new taxes on retail sales that are
currently not exposed to the use tax. Proponents of the bill say the measure merely calls for the
collection of taxes already owed, but the bill leaves a lot to the imagination of the state tax
commission, which will be charged with examining the slightest interactions in Idaho's retail
marketplace for the purpose of determining whether a business should collect and remit use
taxes. (-1) The bill does contain a slight reduction in income taxes. (+1)

Point No. 11: Does it violate the spirit or the letter of either the U.S. Constitution or the Idaho
Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private
property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S.
Constitution or the Idaho Constitution?

ANALYSIS: The Idaho Constitution requires legislation to comprise a single subject. This bill
contains two distinct topics with no adjoining provisions (income-tax reduction and sales-tax
nexus). As such, this bill very likely violates the constitutional provision that requires legislation to
address one subject. (-1)