City Government

Governor Forgot Most Important “Stakeholders”

This guest post comes from long time GUARDIAN reader “IDAHOLIC.” He makes a valid point that individual property owners will get whacked in the pocketbook if the personal property tax–paid in large part by big operators like power and telephone companies–is repealed.

I can’t believe the lack of information and discussion of this proposal that has been cloaked in the concept of unburdening business of an unfair tax. I am amazed at the brazen presentation of the proposal by the Governor’s office. As if they feel no one will notice or object.

AP reports Otter’s plan would eliminate the estimated $140 million tax on business equipment by 2019 or 2020, according to the Idaho State Tax Commission.

Under the proposal, Idaho’s taxpayer-supported general fund would replace about $90 million that cities, counties, schools and other local governments stand to lose under the repeal. Local governments would have options to replace the remaining amount if they decide they need to, by shifting the burden to homeowners and other classes of real property.

The Governor’s office says it has distributed this proposal to all of the stakeholders. Well, it looks like they missed the most largest group: citizen homeowners. Ultimately the average homeowner, and other property taxpayers will absorb this shift in order to increase corporate profits.

The Governor wants to use general funds–tax money we have dutifully paid– to subsidize corporations who don’t feel they should pay for services critical to their operation. They get a guaranteed return on the “investment,” and in the case of the [power companies they have a monopoly.

IACI, whose job it is to put lipstick on this pig, glosses over the true impact of the shift. Their talking suit, Alex LaBeau says, “…it isn’t nearly as dramatic as it sounds”. Nice try!

Then to lighten the impact on schools, the proposal would allow school districts to raise levies (our property taxes) WITHOUT A VOTE OF THE PEOPLE!

Who in the hell do these people work for? I guess we are not stakeholders! Do we all need to mortgage our homes, quit our jobs, buy Brooks Brother’s suits, make political contributions, buy lunches, threaten to leave the state, or whatever it takes to gain the same influence as the big boys?

Maybe it’s time to break out the pitchforks and torches!

Comments & Discussion

Comments are closed for this post.

  1. CJ Petrovsky
    Feb 15, 2013, 11:30 am

    Glad to see this…finally. It was pretty apparent from the start that the money has to come from somewhere and that property owners would get stuck…again.

    I’m told that over the last 10 or so years we’ve gone from 50/50 business/property owner revenue source to 25/75 in Ada County. If this goes, the balance will be shifted even more.

    Just how much time will it take until we’re footing the entire bill?

  2. Home owners are already taxed to
    the max because the market values of their homes dropped susbtantially since 2008. This tax has been extremely onerous and discouraging for the development of small businesses whereas the big corporations can easily afford it, and should. Big companies get other kinds of tax breaks not available to small biz nor to homeowners.

  3. Yeh, this is the first thing that came to mind when I read about this cockamamie idea yesterday. Butch is proposing that the Average Joe pay more taxes so that Idaho Power can get a huge tax break. This is not the Republican Party that I once loved. This is 70’s Democrat Party stuff, where the biggest lobbying influence drives policy.

  4. What is most amazing is the fact that it is an annual amount. The $140 million is not a one time event, but an annual figure. In 3 years, that’s half a billion more the peasants get to pay.

  5. Debie Wilson
    Feb 15, 2013, 1:10 pm

    We have a very small business (just my husband and I, as well as, our three sons). Every year, we have to itemize every thing we have in our offices and shop area….desks, water coolers, calculators, telephones, fax machines, even homemade stands. I have to put down the date I purchased them (or made them) and what I paid for them at the time, also the serial # on each. Not only is it time consuming to go through our whole office/shop each year and look on every item, I pay a tax on them each and every year….again and again. This is ridiculous!! Why do I have to repeatedly pay a tax on the same thing, over and over again. I paid sales tax on each item the day that I purchased them. Each year, I pay over $4000.00 just from this tax on “personal property” for the business. For about two years, we were down to 1/2 pay for each of our sons, and we didn’t even take a salary. We were just trying to get through the downturn. This tax is in addition to real property taxes on our shop. It is a huge hardship to us, as well as countless other small business. I wonder if Micron goes through and reports every desk, calculator, pencil sharpener, etc.

    EDITOR NOTE–Debie, Micron has a tax ceiling on what it pays, thanks to special legislation. The real money is on major “production and operating” equipment and that is what the big boys are fighting. Farmers are exempt and the only really fair way to get some relief is to simply exempt the first $100,000 worth of personal property for everyone. That way the little folks like you wouldn’t be hurt, the big boys would see some relief, but the big value property like power lines, substations, phone switching facilities, mining equipment, etc. would still contribute to local revenues.

  6. Politicians work for those who contribute to their campaigns, right or wrong that is reality. until citizen contributions are larger than corporate, the citizen will loose. your vote is not enough, everyone needs to be more involved, volunteer, contribute, blog, etc.

    and on a personal note, ditch the two party system, vote for a leader, not the lesser of two evils.

  7. Rod in SE Boise
    Feb 15, 2013, 8:06 pm

    The legislature could, if they were so inclined, repeal the per prop tax while requiring that the difference be made up by state income tax. That would be much more fair than property taxes or sales taxes.

    EDITOR NOTE–Rod, that would be a pretty stiff tax since we are at about 8% already on state income tax.

  8. Brian Vermillion
    Feb 16, 2013, 10:50 am

    Otter once again desperately trying to find some voting block that he can appease to. He has seen the success that Obama has had by the gullible voters.

  9. Editor puts it smartly:
    “…the only really fair way to get some relief is to simply exempt the first $100,000 worth of personal property for everyone. That way the little folks like you wouldn’t be hurt, the big boys would see some relief, but the big value property like power lines, substations, phone switching facilities, mining equipment, etc. would still contribute to local revenues.
    But will it get changed rationally???

  10. Rod in SE Boise
    Feb 16, 2013, 3:43 pm

    Dave, Idaho state income tax maximum rate was reduced from 7.8% to 7.4% for CY 2012, for taxable income OVER $100,000. Increasing that to make up for repealing sales tax and property tax would make the tax rate larger but overall it would be more fair. And it would avoid the need for local option sales taxes for trains to nowhere, if you catch my drift, here. In effect, the state would be collecting taxes for the cities and counties (revenue sharing).

    If businesses want to have the business personal property tax repealed, they should expect for that to be made up on business income taxes. Fairness – long missing from the USA.

  11. Debie Wilson clearly explains the ritual that all business owners have to perform every year. The response from The Guardian is similar to most John Q. Public out there. All they care about is where the new source of revenue comes from. Lets not forget the tax is ridiculous! Imagine a wealth tax on everything you own. That new lawnmower, bicycle, cars, and your kids bed was all taxed every year. That means you pay sales tax when you buy it and every year you pay taxes again and again. Trust me the pitch forks would have been out a long time ago.

    Well that is how small business owners feel. This tax is fundamentally unfair. Deal with the Microns and HP’s however you want, but remember they can always move somewhere else.

    I understand the lost revenue will have to be made up, but the existing revenue it currently generates does not justify an unfair tax.

  12. You pay the personal property tax for the “SAINT” hospitals because they are exempt. Don’t forget the churches too.

  13. The governor didn’t forget the homeowner. The homeowner already is exempt from personal property tax and gets the second largest real property tax exemption in the form of the homeowners exemption. The HOE has been dealt with (increased) several times in the last decade resulting in a shift away from the homeowner to the very same businesses that are trying to get relief now. The personal property tax needs to go. The only proposal better than the governor’s would be to repeal the tax and not replace the revenue to local governments. If the locals can prove the true necessity of the services impacted by the loss let them replace the revenue at the local level through real property tax raises voted on by the people.

  14. Wow! Some folks don’t have any historical perspective on sharing the cost of local governments.

    Facts are that over the past 20 years the tax shift has been predominantly away from business to homeowners. Changes in the HOE only partially ameliorated the discrepancy.

    The PPT has been on the books for decades and businesses have thrived, and some have failed. But business failure has little to do with the PPT.

    Guardian readers should be aware that repeal is not as simple as IACI would like. It is in the Constitution:

    SECTION 8. CORPORATE PROPERTY MUST BE TAXED. The power to tax corporations or corporate property, both real and personal, shall never be relinquished or suspended, and all corporations in this state or doing business therein, shall be subject to taxation for state, county, school, municipal, and other purposes, on real and personal property owned or used by them, and not by this constitution exempted from taxation within the territorial limits of the authority levying the tax.

    If the Govenor’s office and IACI don’t abide with the constitutional directive that the PPT “…shall never be relinquished”, then we will confirm that in the general election.

  15. in 2008 a law was passed to exempt the first $100,000 in business personal property. The legislation would push the $20 million cost to local governments onto the general fund to eliminate the tax for about 89 percent of Idaho businesses. In 2009 lawmakers delayed implementation until state revenue begin growing again.

    The Idaho associations of counties, cities and school boards want the 2008 law implemented now but oppose a further shift of the personal property tax.

    Sounds like a reasonable solution.

  16. idaholc, I would suspect that the tax shift from commercial to residential that has taken place over the past 20 years has a lot to do with the fact that residential growth has far out paced commercial growth. Additionally, the county has a higher percentage of non-owner occupied housing (not using the HOE) today than it did 20 years ago.

    I couldn’t argue a bit that business failure or success is driven by the PPT. I would argue that sales tax on personal property would satisfy the constitutional requirement to tax corporate personal property.

    The biggest concern I have with the real vs personal property tax is the way counties enforce payment of each. with real property tax, owners are given three years to make up delinquent tax payments before there property goes to a sherrif sale, with little or no consequence to the owner other than loss of property. With personal property tax an owner is given about 30 days of delinquency before not only a sherrif sale is scheduled on the personal property but an arrest warrant is also issued for the owner. Seems to me like we treat the “business guy” as a different class of citizen than the “homeowner”.

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