New House tax committee chair: Otter's local-option gambit took my breath away

The Legislature's new gatekeeper on taxes says he had no warning when Gov. Butch Otter proposed authorizing local-option taxes in his State of the State speech Monday.

"There was kind of a big pause when the governor mentioned that in his talk," said House Revenue & Taxation Committee Chairman Gary Collins, R-Nampa. "At least my breath -- my breathing -- changed a little bit. That was a big surprise to me. I think it was to a lot of different people. I guess that will just be part of the conversation."

Collins spoke Wednesday morning shortly before his vastly reconfigured committee began its first full business meeting with a review of rules proposed by the Tax Commission. The committee held an organization session Tuesday. Revenue raising measures must start in House Rev & Tax, which has traditionally been more conservative than its Senate counterpart, the Local Government and Taxation Committee.

Collins said his position on local-option hasn't changed since 2008, when he supported a House-passed constitutional amendment to allow voters to approve local taxes, but only with a two-thirds supermajority. The Senate rejected that proposal, in part because local governments opposed the change as too restrictive.

Collins said he agrees with Majority Leader Mike Moyle, R-Star, one of just seven holdovers on the 16-member committee, who said the two-thirds vote and constitutional status is necessary to protect taxpayers. "That's what he's expressed to me and I haven't changed my mind either," Collins said.

Otter said Monday that he doesn't require those two hurdles as part of his plan to help offset repeal of the personal property tax on business equipment. But he conceded the Legislature may be unwilling to enact local-option without the restrictions.

Otter's office has yet to supply Collins with a draft bill or any details. In his post-speech news conference Monday, Otter steadfastly refused to specify whether he was talking about sales taxes or income taxes or other local-option levies. He simply said the matter should be left to local officials and voters.

"I really haven't seen any (draft bills) or anything," Collins said.

But Collins said he plans to move ahead soon with hearings on repeal of the $141 million personal property tax. "I'm sure we'll have something going on here within the next 10 days or two weeks. It's something that we've got to get printed and get out there so we can get serious."

Moyle, who has long gotten most of what he wants in the committee, said he doesn't have a clear read on how the philosophical complexion of the new committee might influence Otter's proposals.

"I don't think any them know," Moyle said. "It's a learning curve for these new guys."

Moyle said some of the newbies have expressed surprise that local-option tax is typically a sales tax, saying, "What's that? Sales tax? People don't like sales tax."

A shift in taxes from business to the rest of us?

That's the way it looks to me.

differences

Adius, why do you think "businesses" are different than "the rest of us"?

Do you realize many of "us" own businesses?

Do you realize many of us own stock shares of big businesses, and even more of us have retirement plans that invest in those big businesses? PERSI stakeholders feel great when their assets go up in value?

Do you realize most of us are employed by a business?

Do you realize ALL of us buy products from businesses?
Do you realize ALL businesses pass their costs onto their customers either directly or indirectly?

So are we not ALL in this together?
And whether a business pays a tax and pas*ses it onto you in higher costs for your products or if you pay the tax directly, it's still coming out of YOUR pocket, right?

Some individual people will pay MORE and some will pay LESS.

yes he does Pimp2!

We all know that many of us work for businesses. Does this shift mean that businesses will lower their prices because they do not have to pay the tax??? I am 99.9% sure they will not. It means we will pay more by way of higher prices on anything we buy and the businesses make more profit! It doesn't matter if it is a hotdog or a new car. Pimp2, none of us non-business owners will pay less. Just those people who we buy from will pay less to run their business. Let me guess, you own a business?

More profits

Eagled, it's not polite to speak for someone else.
Maybe he doesn't realize it and that is why he typed his statement that way.

***

So more profits for big and small businesses. That is usually a good thing!

That means:
-more (income) taxes paid by the owner.
-more money available to pay bonuses to employees.
-more money available to buy products from YOUR employer
-more dividends to pay out to shareholders (Pension plans, PERSI, IRAs, etc) like little old ladies holding dividend stocks for their income stream.
-more dough in the owners pocket to buy a new__X__- good if you work for an X employer).

-the money multiplier of private spending is greater than the multiplier of government spending.

Will they lower their prices? Likely not.
But they also likely won't RAISE their prices next year and beyond.
Remember the high gasoline prices a few years back and lots of businesses ADDED a fuel surcharge?

Don't ASSUME

In actual situation... a shift from personal property tax can and will create jobs, investment and expansion. Only naysayers view the half empty glass of "only profits". Done correctly, together with a sales tax on Internet sales could put Idaho "individual" tax rates and the State coffers in much better shape for the long term. Not to mention create an environment that is industry / employer friendly.

More likely the same crap, more for them and not us.

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RONALD WILSON REAGAN IS DEAD

really?

Sounds alot like Collins isn't in favor of replacing the lost personal property tax funds with local option funds. It seems just like he believes the money will magically reappear if the businesses don't have to pay personal property tax. I guess maybe trickle down economics will work for the first time ever. But I was living in a small town that relies on personal property taxes for emergency services and city and county services, I would sure get ready to see those services either suffer or local citizens have to pay a WHOLE lot more.

interesting thought

Perhaps the goal is to get local option passed once and for all -- but so crippled that no one will ever be able to use it

Responding

If you remove $141 million from the tax revenue, there are limited choices, increase revenues elsewhere, cut spending or some combination. Business is excited about getting rid of a hated tax but so far, the other side of the equation has not been defined. In fact the discussion has been solely about the former without much about the latter. What do you think will happen? I think the needed revenue will come from fees and or taxes that you and I pay, certainly not much from businesses. I also agree that if that tax is removed, prices will not be reduced. Why would any business lower their prices when the market has defined an acceptable level? It won't happen. This is a bad plan for consumers but in this case, it doesn't seem to matter what we think. Am I anti business? You might think so, but no. I have run one. Small business accounts for 2/3 of the businesses in our country, or at least did the last time I saw the numbers. What I am opposed to is side stepping responsibility in the name of correcting a bad tax and placing that responsibility on the public at large without thoughtful review and discussion.

Taking away the personal property tax

and putting it somewhere else, may not be a bid deal for most small businesses. However, for big businesses, and by big I am talking about ones like Idaho Power, Avista, URS, Potlatch, HP, Micron, it is a huge deal.

In the case of the the big companies, the lower taxes will translate into higher profits. That sounds good, but these companies are investor owned. The investors, to varying degrees, live outside Idaho. So, by reducing the tax on these big corporations, it constitutes a shift in the tax from the big, often wealthy, often non-Idaho investors, to lower level Idaho non-business residents.

Or, can you say robbing from the poor to feed the rich, one more time?

Hadn't thought of that

And you are correct. Not that we can do anything about it.

Not one more job....

Just more profit from CEO's and stockholders who only pay 15% if anything anyway. How many jobs were created by Butch's tax cut for himself and Idaho's other millionaires last session? I'm tired of paying more and more to get trickled on again and again.