Idaho's Grocery Tax

The Samuelson Paradox

Don Samuelson's political trajectory from 1966 to 1971 reveals how fast a contested policy can become permanent infrastructure. In August 1966, State Senator Samuelson crushed incumbent Governor Robert Smylie 61–39% in the Republican primary, running explicitly against Smylie's sales tax. Samuelson had opposed the proposed sales tax while serving as a state senator, and his challenge to Smylie was driven largely by opposition to the governor's signing of Idaho's first-ever sales tax.wikipedia.orgWikipediaDon SamuelsonSamuelson's opposition to sales tax and 61–39% primary victory over Smylie→ wikipedia.org[1] His landslide appeared to vindicate anti-tax sentiment.

Yet on the same November 1966 ballot, voters approved the sales tax referendum by a nearly identical 61% margin — a 20-point mandate in favor of keeping the tax.krem.comKREM / Tegna SyndicateThe Story of Sales Tax in IdahoReports 61% voter approval of the 1966 sales tax referendum→ krem.com[2] Voters simultaneously elected an anti-tax governor and endorsed the tax he opposed. The paradox had a simple explanation: Samuelson won with just 41% in a four-way general election, drawing his mandate from a mobilized minority of anti-tax conservatives. The broader electorate supported the deal.eastidahonews.comEast Idaho NewsRemembering Two of Idaho's Most Decisive ElectionsSamuelson won with 41% in a four-way race; details on general election dynamics→ eastidahonews.com[3]

What happened next is the critical evidence. Governor Samuelson (1967–1971) never attempted to repeal or modify the sales tax despite holding Republican majorities in both chambers. He governed as a fiscal conservative — described by one political historian as a "clumsy campaigner" who "communicated poorly"eastidahonews.comEast Idaho NewsRemembering Two of Idaho's Most Decisive ElectionsHistorian's description of Samuelson's communication weaknesses→ eastidahonews.com[3] — but directed his energy toward blocking local tax increases and vetoing bills rather than challenging the sales tax structure itself. By January 1967, just two years after enactment, the tax had funded education increases and entered state and county budgets, creating dependencies Samuelson lacked the political capital to unravel.

The timeline is striking: January 1965 (tax enacted) → August 1966 (Samuelson wins primary on anti-tax platform, 18 months later) → November 1966 (voters approve tax 61%, 22 months later) → January 1967 onward (anti-tax governor accepts the status quo). If an anti-tax governor with an explicit mandate couldn't undo a tax within two years of its creation, the arrangements Samuelson inherited had already hardened into something more durable than ordinary policy. He lost re-election to Cecil Andrus in 1970.wikipedia.orgWikipedia1970 Idaho Gubernatorial ElectionAndrus defeated Samuelson with 52.2% of the vote→ wikipedia.org[4] The sales tax outlived the governor who opposed it.

The Credit That Had No Name

One of the most revealing features of Idaho's 1965 deal was the income tax credit created to soften opposition. From 1965 through 2007 — 43 years — the credit had no statutory connection to groceries or food. Idaho Code §63-3024A, titled "FOOD TAX CREDITS AND REFUNDS," was not added until 2008.legislature.idaho.govIdaho State LegislatureIdaho Code §63-3024AFood tax credit statute added to Idaho Code in 2008→ legislature.idaho.gov[5] Before that, the credit likely resided in §63-3022 as a generic income tax adjustment with no explicit grocery-offset purpose.legislature.idaho.govIdaho State LegislatureIdaho Code §63-3022 — Adjustments to Taxable IncomeGeneral income tax adjustment provisions where credit likely resided before 2008→ legislature.idaho.gov[6]

The Idaho State Tax Commission's current website hints at this history, describing the "Food Tax Credit" with a telling parenthetical: "Formerly known as the grocery tax credit."tax.idaho.govIdaho State Tax CommissionIdaho Grocery CreditCurrent credit description including "formerly known as the grocery tax credit"→ tax.idaho.gov[7] But "formerly" only reaches back to 2008. Before that, it wasn't called a grocery credit at all. According to the Idaho Freedom Foundation, citing the Legislative Research Library, a footnote reference to the credit as a "grocery credit" appeared in 1993, and the word "food" was first added to the statute in 2008 — when the Legislature faced serious grocery tax repeal pressure and formalized the grocery-offset framing precisely when they needed to defend the tax against elimination.idahofreedom.orgIdaho Freedom FoundationThe Ancient Myth of Idaho's Food Tax CreditLegislative Research Library history of credit naming: 1993 footnote, 2008 statutory change→ idahofreedom.org[8]

This 43-year naming gap is not a minor bureaucratic detail. It means the entire framing of "the credit offsets the grocery tax" was constructed after the fact, not built into the original 1965 deal.

During the period this chapter covers — 1967 through 1973 — legislators, administrators, and taxpayers processed the credit as a generic income tax provision with no written connection to food. Without statutory language linking credit to groceries, defenders could frame the credit however was politically useful — as property tax relief, education funding offset, or general tax fairness — depending on the audience. And without any requirement to maintain the credit's adequacy relative to grocery costs, the $10-per-person amount was set once and left to erode.

The Adequacy Erosion Clock

While the credit had no statutory name connecting it to groceries, it did have a dollar amount — and that amount's purchasing power reveals quiet erosion happening from the start. Using Bureau of Labor Statistics food-at-home CPI data, the coverage ratio between credit and grocery tax burden can be estimated.bls.govBureau of Labor StatisticsHistorical CPI Data — Food at HomeConsumer Price Index data for food prices used in coverage calculations→ fred.stlouisfed.org[9]

In 1967, a family of four spending approximately $1,500 annually on food would have paid roughly $45 in grocery taxes at the 3% rate. The $10-per-person credit ($40 total) covered an estimated 89% of that burden — close to a full offset. But food prices didn't stand still. By 1968, food inflation had already reduced coverage to approximately 87%. By 1970, with food prices rising roughly 13–14% above the 1967 baseline, the credit covered an estimated 78% of grocery tax burden, leaving families with an uncovered gap. For six years, from 1967 through 1972, the credit sat at $10 per person while food prices climbed steadily.

The 1973 Legislature increased the credit from $10 to $15 per person,gemstatepatriot.comGem State PatriotA History of Idaho's Grocery TaxReports 1973 credit increase from $10 to $15 per person→ gemstatepatriot.com[10] which temporarily restored coverage to approximately 95% — even exceeding the 1967 baseline. But the increase came only after six years of erosion, during which the credit was demonstrably inadequate from roughly 1970 onward. No evidence exists in accessible records of public debate about credit adequacy during those years.legislature.idaho.govIdaho State LegislatureSession Information — Pre-2003 RecordsPre-2003 committee testimony and floor debate not available online→ legislature.idaho.gov[11] The 1973 increase appears in session laws without available floor debate transcripts or committee testimony explaining why legislators chose $15 rather than indexing the credit to inflation.

This pattern — gradual degradation masked by nominal stability — reveals a core mechanism. The credit "held" at $10 for eight years, creating an appearance of consistency. Inflation eroded its real value steadily, shifting more grocery tax burden onto families without any visible policy change. By the time legislators adjusted the credit, it had been inadequate for years — yet this inadequacy generated no apparent political pressure or constituency mobilization in accessible records. The tax had normalized to the point where its slowly increasing regressivity went unnoticed or unchallenged.

Revenue Without Records

Tracking Idaho's sales tax revenue growth during 1967–1973 proves difficult because comprehensive year-by-year data is not available in digitized state archives. The Idaho State Tax Commission's annual reports from this period exist in physical archives but have not been published online.tax.idaho.govIdaho State Tax CommissionReports and StatisticsHistorical revenue data not available in digitized format→ tax.idaho.gov[12] This data gap — thin documentation of a fiscal shift affecting every Idaho household — is itself significant.

What is documented reveals rapid structural integration. According to Idaho State Tax Commission records, the sales tax distribution formula changed frequently during the deal's early years:tax.idaho.govIdaho State Tax CommissionSales/Use Tax Rate and Distribution History (EPB00734R)County revenue sharing schedule: 0% (1965) to 20% (1971)→ tax.idaho.gov[13] counties received 5% of gross collections starting in July 1968, rising to 10% in 1969, 15% in 1970, and 20% by 1971. Within six years of enactment, the state was sharing a fifth of all sales tax revenue with counties, creating local government dependencies that gave county officials a direct fiscal interest in preserving the tax.

On property tax relief, HB 222 had explicitly prohibited a state property tax levy "while a sales tax is in effect" — language now codified in Idaho Code §63-801.legislature.idaho.govIdaho State LegislatureIdaho Code §63-801 — Property Tax ProhibitionProhibits state property tax levy while sales tax is in force→ legislature.idaho.gov[14] This created binary fiscal logic: keep the sales tax or restore property taxes. Challenging the sales tax became simultaneously a challenge to property tax policy, doubling the political difficulty.

The education funding picture complicates the deal's stated rationale further. Governor Smylie had promised the tax would produce "revenue adequate to the needs of these expanded services" for schools,ktvb.comKTVB / Tegna SyndicateThe Story of Sales Tax in IdahoSmylie's 1965 State of the State quote on education revenue adequacy→ ktvb.com[15] and HB 222 committed "dividends dedicated to Idaho Public Schools." Justice Bob Huntley, recalling in 2022 his role as a 1965 floor sponsor, said the package passed partly because "there was a wellspring of people all over the state who supported education and were demanding something."idahopress.comIdaho PressProposal Would Lower Idaho's Sales TaxHuntley's 2022 recollection of 1965 education support driving sales tax approval→ idahopress.com[16]

Yet National Center for Education Statistics data shows Idaho's relative position worsened after 1965. By 1969–70, Idaho spent $603 per pupil compared to the national average of $816 — just 73.9% of the national figure. Neighboring Montana spent $782 per pupil, or 130% of Idaho's level.nces.ed.govNational Center for Education StatisticsDigest of Education Statistics — Historical Per-Pupil ExpenditureIdaho $603 vs. $816 national average per-pupil spending, 1969-70→ nces.ed.gov[17] The promise was education improvement. The delivery was Idaho falling further behind. Yet this shortfall didn't weaken the tax's position — a sign that by the late 1960s the deal was held in place by fiscal arrangements, not by the fulfillment of its original promises.

The National Wave Idaho Didn't Join

While Idaho's tax quietly normalized, food tax policy nationally was entering a pivotal transition. Peer-reviewed research identifies three historical waves of food tax exemption.sciencedirect.comScienceDirect / Peer-Reviewed JournalSpatial Pattern of U.S. State Grocery Tax ExemptionsAcademic research documenting three waves of food tax exemption across U.S. states→ sciencedirect.com[18] In the first wave (1930s–1940s), states like California and Texas never taxed food at all when they adopted sales taxes. In the second wave, beginning with Iowa's July 1, 1974 food exemption — which researchers describe as having "triggered" the movement — states including Michigan, Washington, Indiana, Kentucky, Nevada, Arizona, and Colorado followed through the 1970s and 1980s. A third wave from the 2000s through the 2020s has brought exemptions in Georgia, North Carolina, West Virginia, Oklahoma (2024), and Kansas (fully eliminated January 2025).

Iowa's reversal proved a watershed moment — the first documented case of a state that had previously taxed food choosing to exempt it. Iowa tied its food exemption to items eligible for USDA Food Stamp purchase, creating administrative harmony with federal food assistance programs. Idaho faced no such federal trigger during 1967–1973, and searches of accessible Idaho legislative records found no bills proposing food exemption during this period.legislature.idaho.govIdaho State LegislatureLegislative Records — Bill SearchNo food exemption bills found in accessible (post-2003 digitized) records from this period→ legislature.idaho.gov[19] Physical archive research would be needed to confirm that no proposals were discussed informally or introduced but not advanced.

Idaho's divergence matters because of timing. Had Idaho adopted its sales tax in 1975 instead of 1965, it would have done so during the second-wave momentum and might have exempted food from the start. Instead, the state established its tax-with-credit structure nine years before Iowa showed an alternative path, giving the arrangements enough time to harden. By the time the national wave crested with neighboring Washington, Nevada, Arizona, and Colorado exempting food, Idaho had developed what it presented as an alternative approach: a credit that had no statutory connection to groceries, eroded in real value, and provided incomplete offset. As of 2026, the Center on Budget and Policy Priorities notes that credits generally fail to offset grocery taxes for many people in poverty — credits may be too small, available only to some low-income people, or require families to file tax returns to claim them.cbpp.orgCenter on Budget and Policy PrioritiesStates That Still Impose Sales Taxes on Groceries Should Consider Removing ThemAnalysis of credit inadequacy compared to full exemption for low-income families→ cbpp.org[20]

What Locked In by 1973

By the end of 1973, Idaho had constructed what might best be understood as architecture: load-bearing, invisible, and expensive to modify. The 3% sales tax rate would hold constant for 18 years, from 1965 through 1983.tax.idaho.govIdaho State Tax CommissionSales/Use Tax Rate and Distribution History (EPB00734R)Rate held at 3.0% from 1965 through at least 1981→ tax.idaho.gov[13] The credit sat at $15 per person, its generic name revealing nothing about its supposed purpose. No organized groups visibly defended or challenged the structure in accessible records. No legislators introduced food exemption bills. Counties depended on 20% revenue sharing. Property tax elimination was constitutionally coupled to the sales tax's continued existence. And the credit's low visibility — a generic line item received once annually at tax time, disconnected from grocery taxes paid weekly at checkout — meant most taxpayers likely never calculated whether the offset actually worked.

This is how policies become facts. Not through dramatic defense or visible constituency mobilization, but through the accumulation of fiscal arrangements, institutional routines, and political assumptions that stop being debated and start being background. The 1965 deal had survived its most likely challenge (Samuelson) within two years. By 1973, it had survived eight years of credit erosion without adjustment generating visible political pressure. The window when structural change was still inexpensive — before decades of dependencies, before the credit's existence provided political cover against exemption — was closing. When Iowa showed an alternative path in 1974, Idaho's arrangements had already hardened into the structure the state would carry for the next half century.

Sixty years later, Idahoans are gathering signatures for a 2026 ballot initiative to exempt food from sales tax — an initiative necessitated by the same legislative gatekeeping that has blocked repeal bills for decades. The credit, renamed in 2008 to "food tax credit" and increased to $155 per person, still follows the same pattern: periodic manual adjustments that restore some adequacy while the fundamental architecture remains untouched. The quiet period of 1967–1973 built the structure. Everything since has been renovation within walls that were set before anyone noticed they were being poured.