Representative aims to ax business tax break

BOISE – A North Idaho state representative says he’ll try to kill the compromise business tax break that the Idaho Senate unanimously approved late this week.

“I don’t want to divide the business community up. I don’t want to drive a knife between big businesses and small businesses,” said Rep. Jim Clark, R-Hayden Lake, who was the House sponsor of the original bill, HB 599.

His bill would have phased out the property tax on business equipment over five years, at an eventual cost to the state of $120 million a year. The amended version exempts each business’s first $75,000 in value from the tax, freeing 86 percent of Idaho businesses from paying anything – and costing the state $15.5 million a year.

“I really like the (original) bill,” Clark said. “It’s all or none.”

The amended bill, HB 599a, is awaiting House action to concur with the Senate amendments. On Friday, Clark intentionally made no motion either way when that order of business came up in the House, leaving the measure held at the House speaker’s desk.

Lawmakers are back in session on Monday, and expect to keep working through Wednesday.

The amended version resolves questions raised in public hearings on the bill. But the Idaho Association of Commerce and Industry – an influential business lobby that’s been pushing for the bill for the past two years and proposed it this year – says it would rather have no tax break than the amended bill.

Idaho businesses long have complained about the personal property tax, which they pay each year on business equipment such as computers, desks and machinery. Several years ago, lawmakers exempted agricultural equipment from the tax, and agreed to send payments to counties, school districts and other taxing districts to make up the loss. The state doesn’t receive any of the tax; as a property tax, it goes entirely to fund local government and schools.

But those state payments to counties don’t increase over time when businesses grow, like the tax did, and the result has been a tax shift that means other property taxpayers in each county – including homeowners – pay a little more to make up for what farmers are no longer paying. That same scheme was proposed in HB 599.

The bill also would have required the state to pay the full, $120 million annual cost of the tax break by 2014, regardless of the state of Idaho’s budget. Clark said that prospect didn’t worry him.

“We come up with $20 million, $40 million, $60 million every year – we just find the money every year,” he said. “All we have to do is get our priorities right. If this is what we want to do is make personal property (tax) go away for the first time in 100 years, it has to be the priority. … I think it’s all or none.”