Editorial: Scrutiny warranted in Idaho tax controversy

The plot just thickened in the case of Idaho handing out questionable tax breaks to politically connected people and businesses. More longtime workers for the state Tax Commission have come forward to say that these secret deals are still being cut, despite 2009 reforms designed to end the problem.

The controversy surfaced in 2008 when senior state tax auditor Stan Howland sent lawmakers a lengthy report alleging that tax commissioners were routinely making unwarranted concessions to large, multistate corporations who protested their tax bills and then used the state’s nondisclosure laws to hide the details. According to former Supreme Court Justice Robert Huntley, the deals became so commonplace that corporations would ask for their “Idaho tax break.”

Two state investigations failed to produce any illegal activity, but they did spawn some changes. Before the “reforms,” a single tax commissioner could cut a deal. Now there has to be an extra hearing and the involvement of at least two commissioners on deals worth $50,000 or more. But the details have remained under wraps.

It’s not enough to say that laws have not been broken. The public needs to know the nature of the breaks, whether they are justified and whether they are handed out in an equitable fashion. Without the details, there is no way to hold the commission accountable.

Because the reforms were so weak and the veil of secrecy was not lifted, state Rep. Shirley Ringo, D-Moscow, filed a lawsuit, saying these deals could be in violation of the Idaho Constitution, which calls for uniform tax treatment of citizens.

Since then, seven longtime Tax Commission workers have issued sworn statements that the problem persists. Three current workers have come forward in the past two weeks.

The charges cry out for an investigation, and Ringo has said she would drop her lawsuit in favor of that. Among the allegations:

• A veteran auditor says he was threatened with disciplinary action if he didn’t rescind $400,000 in tax penalties.

• A taxpayer wrongly claimed nonbusiness income, but the state settled for half the amount owed. The cost to the state was about $680,000.

• The state forgave $700,000 in taxes owed on golf membership fees.

• A taxpayer is claiming a full investment tax credit on a $7 million plane. If this is granted, it could set an expensive precedent for other such deals.

Examples from 2008 also appeared to show that powerful constituents were given special consideration. At that time, the commission didn’t require protesters to provide documentation, and 75 percent of corporations declined to turn over relevant data to auditors.

“This is the worst scandal I’ve seen in Idaho since I first came here in 1950,” said Huntley, who is representing Ringo in her lawsuit.

It sure doesn’t smell right. The only way the state can clear out the stench is to investigate the claims and provide a full public accounting.