There's a right way, and a wrong way, to kill a hated tax

Senate President Pro Tem Brent Hill is probably right.

He predicts the 2013 Legislature will do away with the “personal property tax,” which requires businesses to inventory, and pay tax, on furniture, computers and supplies as sundry as staplers.

Book it. This is a dead tax walking.

It may be the most hated tax in Idaho — and that’s saying something. As our editorial board has interviewed legislative candidates this fall, we have found almost unanimous support for getting rid of the tax. That cuts across party lines, since many citizen legislators, Republican and Democrat, are business people who have had to pay this tax. The kindest of the critics say this tax is onerous.

This uniform dislike of the personal property tax is not a new phenomenon. The 2008 Legislature approved a five-year phaseout of the tax — without a single dissenting vote. But the yearly reduction was tied to state revenue growth of 4 percent or better, a threshold that hasn’t been reached in the past four years.

So, eager to do something, lawmakers will take another swing at slaying this tax in 2013. That seems inevitable. They only question is whether they do it right, or do it wrong.

Hill, a Rexburg Republican and certified public accountant, is offering a sound approach. He wants to phase out the elimination of the tax over six years, but replace the $133 million to $143 million that now goes to local governments.

Makes sense. But at the same Boise Metro Chamber of Commerce panel Thursday, Idaho Association of Commerce and Industry president Alex LaBeau pushed for a six-year phase-in, but said the state should let local governments eat the difference. He argues that the local governments can cover the gap with the 3 percent property tax increase allowed under state law.

Let’s call that what it is. A tax shift, or at least a partial one. Businesses would enjoy the tax savings, and the reduced paperwork, that comes with the elimination of the personal property tax. Businesses would certainly pay some of the difference through increased property taxes, but so would homeowners and landlords.

Perhaps more significantly, LaBeau’s option would continue a troubling Idaho tax trend: cutting a tax without a clear way to pay for it. Lawmakers did this when they cut income taxes in 2001. They did it again in August 2006, when they cut property taxes for schools, and raised the sales tax to make up most but not all of the difference. And they did it again this year, when they reduced the corporate income tax and the upper end of the individual income tax.

After a while, it gets to be a habit.

It will be intriguing to see which school of thought prevails on the personal property tax in 2013. In 2008, lawmakers resisted IACI’s push for a complete personal property tax repeal — a go-for-broke move that would have only deepened the fiscal crunch that gripped the Statehouse from 2009 to 2011.

Before following IACI, arguably the Statehouse’s most powerful lobbying outfit, lawmakers would be wise to ask themselves where that group would lead them.

Mystery money

Melaleuca CEO Frank VanderSloot says it wasn’t him.

State Superintendent of Public Instruction Tom Luna says he’s in the dark too.

I refer to the still-mysterious $200,000 donated to Parents for Education Reform, one of the groups hoping to convince Idaho voters to uphold Propositions 1, 2 and 3, Luna’s Students Come First education laws. The money came from a group called Education Voters of Idaho, but the donor or donors remain unknown.

“I don't even know how many of them there are,” Luna told the Statesman editorial board Monday.

Lucky for Luna — and for the rest of us — that Secretary of State Ben Ysursa is on the case, and is a stickler for that sticky thing called transparency. Ysursa, Idaho’s umpire on all things elections, is demanding that the donors reveal themselves. Education Voters of Idaho describes itself as a nonprofit, and, as such, its donors are shielded from disclosure.

To his credit, Ysursa isn’t buying. “It eviscerates the law if we don't get disclosure,” he told the Associated Press earlier this week.

The Republican Ysursa may be getting on the wrong side of Luna and his GOP allies, the folks who are pushing to rescue Propositions 1, 2 and 3 from a ballot challenge. But Ysursa is on the right side of the issue.

And there’s always this: Ysursa’s principled resistance gives the Students Come First backers one more thing to gripe about. They’re already stinging over the fact that opponents have outraised them by nearly a 3-1 margin (even factoring the mystery money into the total). They’re grumbling because the vast majority of the opponents’ $1.38 million has come from state and national teachers’ unions.

Now, concerned that the Education Voters of Idaho money may be mired in a legal dispute until Election Day,
VanderSloot is vowing to double down. Melaleuca has already contributed $160,000 to supporters and has bankrolled a series of full-page ads defending the laws. On Wednesday, VanderSloot said, “You’re gonna see Melaleuca’s name all over the place.”

Is that a promise or a threat?

It’s hard to feel too sorry for him. Especially since the problem of the mystery money could be easily solved.

fuzzy gla sses

"Businesses would certainly pay some of the difference through increased property taxes, but so would homeowners and landlords."

***
Why is it so hard to understand "businesses" is the same as homeowners and landlords?

Is there ONE business owner that is not also a homeowner? ----eventually at some level.

Especially when the intial plan was to start with business under $100,000 of reporting. THAT business is likely owned by a mom and a pop.

They pay less in busines tax and more in real estate property tax. Some will net out to pay less and some will net out to pay less. Just like everything else.

So what's the big deal?

***
And KR, why not so some research on this find the % of business taxes vs residential taxes. And pull a couple examples. ie. the property taxes for your residence vs the property taxes McClathy pays for that brown box building you work in. You might be surprised.

I'm not an Accountant

But, I play one while attempting sort out all taxing venues. or any other place I might be taxed. Sales tax on Groceries has to go. Brent, will you replace those funds? How?

Even the destitute pay taxes

If they're fortunate to have shelter, they're paying property tax, at twice the rate of a homeowner, (I haven't yet met a business owner / landlord that doesn't include overhead into his rental schedule, as the homeowners 50% exclusion of value is a significant part of my retained annual income).

I've never met another fellow human being that could live very long w/o eating, ("Breatharians" excluded).

I know Brent lives in a bubble. But if he can't find a solution to the 6% Sales tax on food... Where the H, E, double sticks does he expect to replace funding for the Counties services and Schools?

This Tax Works

Has Idaho grown and prospered in the last 149 years? This seems like a silly question until one considers the chorus of pro-business voices that cry for a repeal of the state’s personal property tax, which was first instituted by the territorial legislature in 1863.
“It’s unfair to business; it’s double taxation, we can’t grow the state’s economy if businesses are forced to pay a tax on their property, etc. etc.” comes the alarm from people like former FMC and ON Semiconductor publicity man Arlen Wittrock.
Never mind that by any standard, the personal property tax hasn’t hindered the development of our state. Never mind that the relative pittance that businesses pay in personal property taxes helps fund the economy and lifestyle that attract businesses to Idaho, things like infrastructure, state services, and a host of other institutions for the good of us all.
Our legislators will be lobbied heavily by folks like Wittrock and the so-called Idaho Freedom Foundation to axe the tax this year. For the sake of the state, the solons and Governor Otter need to stiffen their backbones and tell them no.

Vandersloot is a Bully

And isn't that alone the reason why he should not be involved near the school house?

Please..............

Richert, get this through your puny liberal brain. When this tax is repealed, the money will be replaced by the 3% additional levy all taxing districts can put in place. The ability to replace this savings to the taypayers will take a few years but is far better than putting a huge tax on people all at once.

Ps....Your decision to not endorse for President shows a lack of journalistic courage. You endoesed Obama in 2008 and now won't man up and explain why you are not endorsing him this time around. Are you suggesting we not vote for either man? Take my advice and don't vote...let those of us who care about this country cast a vote. Your move to California can't come soon enough.

tax shift

so the tax will be shifted from businesses to individuals, and particularly to the poorer counties that depend on this money the most. And if it takes a few years, what are the residents in those counties supposed to do in the meantime?

Your idiotic rant ................

Dummy , I realize that this may come as a shock to you but this is still America , the vote is a private thing and who someone wants for President is none of your biased business . Give it a rest .

Domer, if you think the 3%

Domer, if you think the 3% tax shift is going to replace the 9% missing taxes, you need to go back to math class.

State Superintendent of Public Instruction Tom Luna says he’s in

State Superintendent of Public Instruction Tom Luna says he’s in the dark too.

That's been obvious from the beginning

Personal Property Taxes

Problem with the thinking of "businesses" is the same as homeowners and landlords is that of location.

The principal of taxes is that they are paid in the territory that the revenue is generated.

You have them pay the taxes there to pay for all the services that government provides for that territory, not other states or countries.

3% per year.....

for 6 years = 18% property tax increase. Are you ready for that? How much more trickling on can you take from a group who supposedly vows to not raise taxes?