IACI: ‘This finishes off this tax once and for all’

Alex LaBeau, head of the Idaho Association of Commerce and Industry, noted that he was sitting all by himself before coming up to present his personal property tax bill, HB 276, and he looked behind him at the audience before he began speaking. “I didn’t have anybody sitting next to me,” he said. “I just wondered if there was anybody behind me.” Responded Rev & Tax Chairman Gary Collins, R-Nampa, “There is.”

LaBeau told the committee, “This is not just a starting point  - this finishes this tax off once and for all.” He said, “The personal property tax is a tax that we all know doesn’t fit within the category of being a good tax.” He said business equipment and machinery depreciates, and argued that that already creates a tax shift to other property taxpayers every year when those values drop. “Ask the question, what is it that we could be doing better in the state of Idaho in terms of tax policy for those employers that are already here? Almost unanimously,” LaBeau said, businesses say “eliminate the personal property tax. It is a tax whose time has come to go away.”

His bill, HB 276, phases out the tax over seven years. In the first year, his bill would exempt $100,000 in value for each taxpayer, as opposed to HB 272, which exempts up to $100,000 in value in each county. “But we don’t just stop there,” he said. “We are going to eliminate this tax in phases,” reaching  “100 percent in 2019.”

Unlike HB 272, the counties’ bill, the IACU bill includes operating property, which is centrally assessed property like utilities’ power lines, pipelines and railroad tracks. But LaBeau said it distinguishes those companies that are “rate regulated” by the government. “Rate regulated are treated differently, by only looking prospectively,” he said. “New property that they bring online, they will afford the exemption. … It won’t allow for anything that is currently in existence.”

The bill also allows the phase-out to be delayed for a year if economic conditions force such a move.

“We believe that there will be an economic stimulus associated with this,” LaBeau said. He said a 2007 economic analysis that IACI commissioned showed that after-tax income to Idahoans would rise by $6.19 for every dollar of net cost to the state for eliminating the tax. “We believe that this is good policy,” he said. “This doesn’t penalize success. This stimulates success in the state of Idaho. This stimulates growth in the state of Idaho. This stimulates jobs in the state of Idaho. This is good policy that the businesses have been asking for for years.”