Printed on: January 17, 2013
Heading off a reverse Robin Hood
Jerry and Carrie Scheid
The Idaho Legislature could reduce taxes on small businesses and still protect cities, counties and schools, write Carrie and Jerry Scheid.
Carrie: Looks like the hot issue before the Legislature this session is the proposal to repeal the business personal property tax.
Jerry: What's a business personal property tax?
Carrie: It's a tax businesses pay on things they own like computers, office furniture, machinery, signs, tools, etc. You probably aren't familiar with it because as a rancher you never paid it. Our ag-heavy Legislature exempted farmers and ranchers from this tax.
Jerry: Sounds like it's a nuisance to calculate and collect. I can see why they don't like it.
Carrie: The problem is that these taxes generate $141 million annually for local counties, cities, schools, hospitals, libraries, fire districts and lots of other services. For example, Bonneville County would lose $1.9 million, Idaho Falls School District 91 would lose $1.4 million, Bonneville School District 93 would lose $881,000, etc. Poor rural counties get hit hardest. Caribou County would lose $1.8 million, which is 43 percent of its property tax revenues. That's why Monsanto, located in their county, won't even support this idea.
Jerry: Those are the losers; so who are the winners?
Carrie: The winners are Idaho's richest corporations such as Idaho Power, Union Pacific, Century Link, Micron, etc. They pay the lion's share of the $141 million.
Jerry: Sounds like our Legislature is about to do a reverse Robin Hood.
Carrie: There is a better way to do this. Based on 2011 figures, if the Legislature exempts the first $100,000 worth of business personal property, almost 90 percent of Idaho's businesses wouldn't have to pay this tax. Local governments would lose $20 million, not $141 million.
Jerry: I like that because it would take the tax burden off small businesses. Here's another thought. Why doesn't our Legislature take a hard look at sales tax exemptions? A 6 percent sales tax on business services like security or building services would generate $106 million. Even better, sales taxes on professional services like lawyers and accountants would yield $208 million annually. Maybe that would result in fewer lawsuits.
Carrie: With so many lawyers in our Legislature, I doubt that will happen. Rather than doing the hard work of eliminating sales tax exemptions, the governor is proposing local option taxes to solve the problem. That might work for wealthier counties, but how does Caribou or Clark County raise taxes when they have tiny populations and little commercial base?
Jerry: Hmm ... the Legislature wants everyone to think they are holding the line on taxes when, in fact, all they are doing here is passing the tax burden onto our cities and counties. Reminds me of Mark Twain's saying: "To do good is noble, to get others to do good is even more noble and less trouble."
Jerry is a retired farmer/rancher and native Idahoan. Carrie is a retired nonprofit administrator. They live in Idaho Falls.