Only eight states have no personal property tax on business property, attorney and CPA Rick Smith of Hawley Troxel said at today’s AP Legislative Preview. Still, he urged its repeal in Idaho. “It gives Idaho an opportunity to get out in front on this issue,” Smith said. “Here is a reason to come to Idaho.”
Dan Chadwick, executive director of the Idaho Association of Counties, said, “I don’t think there’s any question that the personal property tax is a lousy tax, it’s hard to administer.” But, he said, “It’s the cards we’ve been dealt.” The tax is a significant source of the funding that provides public services in many Idaho counties, he said. “Caribou County stands to lose $2.1 million out of their budget,” if the tax is repealed, he said. “That’s a small county and that’s a large chunk of their operating budget,” about 40 percent. “We’d have to find a way to replace those dollars. It is not going to work, simply to say ‘figure this out.’”
Former longtime chief state economist Mike Ferguson offered a different view: He noted that the personal property tax is in the Idaho Constitution, it’s been part of the taxing structure in which Idaho’s economy has thrived for many decades, and he said repealing it would be “a misguided public policy decision and wrong for Idaho.” Ferguson noted that Idaho’s school districts would lose $38.6 million in funding – nearly as much as the $38.9 million counties would lose. School districts would see their property tax bases shrink by between 20 and 50 percent, making it that much harder for them to persuade local voters to pass property tax overrides – because it would take higher tax rates to raise the same amount of money.
Ferguson also noted that a few large companies would be the main beneficiaries; Idaho Power, for example, accounts for a third of all the operating property subject to the personal property tax in the state; operating property, such as utility lines and pipelines, is a significant chunk of the value on which personal property tax now is collected.