How could this be true? Don’t tax cuts make it easier on everyone?

It is counterintuitive to think tax cuts hurt those with less income, so let’s explain why. Tax cuts hurt in two ways.

The first way they hurt is that Idaho’s flat tax rates take a bigger chunk out of a lower income person’s income after housing, food, healthcare and other necessities are taken out. In fact, for many Idahoans, there’s simply not enough money at the end of the month even if taxes were reduced to $0 (we’ll get to that later in our Making Ends Meet discussion. Let’s see why flat taxes are unfair to lower income households but very beneficial to wealthy ones.

Let’s take this example-

Let’s imagine a married couple in Bonneville County. Both spouses work and 2 children in day care. They have an income of $100,000. On average, they will pay $86,100 (1) on housing, healthcare, transportation, etc. just to cover the basics and another $9800 on federal taxes. This budget is tight- no meals out, no vacations, no savings- just the minimum. Of the $4100 they have left over, they must pay $2722 to cover their state taxes. That state tax burden is 2/3 of what’s leftover. At the end of the year, they have only $1380 to go towards something discretionary (savings, travel, etc.)

Let’s imagine there is another family in Bonneville County, but they are making $200,000. They have similar expenses. They have to pay more federal income taxes ($28,900) but have $84,900 left over to cover state taxes. And trips to Disney World, savings, and so on.

Both families in this example pay the same 5.3% state income tax but the burden placed on the lesser income family is much higher.

Replace this with a chart

The second way tax cuts hurt is that it gives the state less money to carry out programs. These projects include funding transportation, public schools, and social programs. Cuts have been made to several areas in an attempt to balance the budget. Medicaid in particular has been target with a reduction of $22M in funding. The impact of this is ….

, $30M to higher education, forcing layoffs and rising tuition at our universities.

Other Affected Areas:

• [Idaho Launch]: The state-funded grant program for high school students saw $10 million cut from its budget for this year and another $10 million for the next, leaving roughly $65 million for the class of 2026.

• Idaho Digital Learning Alliance (IDLA): A proposed $13.5 million cut was introduced for the virtual program, potentially limiting middle school access and funding.The Idaho Legislature passed a 5% budget cut for four-year colleges and universities in the fiscal year 2027 "maintenance" budget (HB 876). This, following a 3% to 4% cut for the current 2026 fiscal year, aims to balance the budget. These reductions affect faculty and staff, with institutions facing potential, or current, staffing layoffs and program restructuring. 

  Idaho Statesman +5

  Key Details on Idaho Higher Ed Budget Cuts:

  • Budget Cuts (FY2027): The Legislature passed a $30 million reduction in funding for higher education, including a 5% cut for four-year institutions and a 3% cut for two-year colleges.

  • Impact on Universities: The cuts are expected to cause significant restructuring, staff layoffs, and potential program reductions at institutions like Idaho State University (which faced an estimated $8 million gap) and the University of Idaho.

  • Disproportionate Cuts: Higher education is bearing a disproportionate share of the state budget cuts compared to other sectors like K-12, which were exempt.

  • Previous Reductions: In addition to the upcoming cuts, Gov. Brad Little signed a 1% cut in the current 2026 fiscal year, on top of a 3% "holdback" (approx. 4% in total reductions), to address budget shortages.

  • Student Consequences: The Idaho State Board of Education (SBOE) advised lawmakers that the cuts could trigger program bottlenecks and potential delays in student graduation. 

    Idaho Statesman +7

  Institution-Specific Impacts:

  • Idaho State University (ISU): Facing an approximate $5.2 million cut, ISU is conducting a strategic budget restructuring, resulting in potential program cuts, employee reductions, and restructuring.

  • Boise State University (BSU): Addressing a $6.8 million cut in the current budget cycle, BSU is also reorganizing.

  • University of Idaho (UI): Facing a $5.2 million cut, with reports of potential staff layoffs and program adjustments.

  • Lewis-Clark State College (LCSC): Facing a $1.2 million cut. 

    Idaho State University +3

  Other Affected Areas:

  • [Idaho Launch]: The state-funded grant program for high school students saw $10 million cut from its budget for this year and another $10 million for the next, leaving roughly $65 million for the class of 2026.

  • Idaho Digital Learning Alliance (IDLA): A proposed $13.5 million cut was introduced for the virtual program, potentially limiting middle school access and funding. 

    Idaho Education News +1