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Count on it: Personal property tax elimination will be discussed by coming Legislature

Count on it: Personal property tax elimination will be discussed by coming Legislature

Idaho Freedom Foundation staff
December 7, 2012
Idaho Freedom Foundation staff
Author Image
December 7, 2012
IACI president Alex LaBeau sees the personal property tax as a hindrance to business growth.

“This is a horrible tax.”

Alex LaBeau’s assessment of Idaho’s business personal property tax could not have been clearer. LaBeau is the president of the Idaho Association of Commerce and Industry, a pro-business advocacy group, and he was presenting his case for eliminating the tax at the annual Associated Taxpayers of Idaho convention in Boise.

“Eliminating the business personal property tax without replacing the revenue that it generates will undermine our ability to provide essential services.”

Dan Chadwick’s position could not have been clearer, either. He heads up the Idaho Association of Counties, an umbrella organization that serves the needs of county government officials. He and LaBeau both addressed the convention audience, and articulated very different views on the issue.

Taxing “personal property” in Idaho is not new; the practice has been in place for more than a century. According to the Idaho State Tax Commission’s website, taxable personal property consists of “items used commercially, such as furniture, libraries, art, coin collections, machinery, tools, equipment, signs, unregistered vehicles, and watercraft.”

The website further states that “taxable personal property also includes items used commercially for convenience, decoration, service, or storage. Examples are store counters, display racks, desks, chairs, file cabinets, computers, typewriters, office machines, and medical/scientific instruments.”

Chadwick urges caution for those who want to eliminate the tax, noting that county governments rely on it quite heavily to fund the services that they provide. According to him, the greatest expenses to Idaho counties are in operating district courts, and in providing indigent care and “justice services,” and he notes that demand for these services has increased in recent years.

“Our county governments don’t get to decide what services they provide,” Chadwick told the convention audience. Noting that the business personal property tax funds up to 50 percent of some county’s budgets, he explained that “the counties are told what they will do by the state Legislature, so they’re not in control of how we spend our money.”

But LaBeau sees the tax as a hindrance to business growth, lamenting that the tax is unevenly applied and difficult to define. And he’s not alone in his concern.

“Because the tax is based, to some degree, on self-reporting, business owners will often value similar pieces of property at very different levels,” noted Dr. Stephanie Witt, professor of public policy and administration at Boise State University, who was in attendance at the conference. “This means that the state ends up with a lack of precision in the application of the tax.”

Chadwick argues that the tax can be sustained by shifting most of its burden to bigger businesses, and relieving small businesses of it. “Everybody is small, compared to Walmart,” LaBeau argues. “It’s time to quit juxtaposing big and small businesses against each other, and begin to respect businesses of all types,” he stated.

LaBeau says that the trend in Idaho has been to move away from the personal property tax, noting that in 1901 the state quit taxing “pots and pans,” and in 1961 it stopped taxing personal home furniture. He proposes that the tax be gradually phased out over a six-year period, while Chadwick is more tepid on the matter. “If the states aren’t going to budget money for counties,” Chadwick stated, “then it’s time to re-evaluate the service mandates placed upon them.”

Elimination of the tax is expected to be an issue in the 2013 legislative session. That is one point both LaBeau and Chadwick agree on.

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