Bill description: HB 556 would allow county commissioners to exempt individual businesses from the personal property tax.
Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
Idaho assesses a personal property tax on business-owned items—such as computers, desks, or chairs—with a total value of more than $100,000. HB 556 would allow county commissioners to not assess this tax on businesses.
Local governments base their total property tax assessment off of their budget, rather than budget off of the tax revenue. Regardless of the total value of the property assessed, local governments can increase their budgets up to three percent plus an additional amount for any new construction or annexation. The budget amount is then assessed across the total property value in the taxing district.
If county commissioners did choose to exempt a business’ personal property, the revenue for the affected taxing districts would not decrease. Instead, the assessed value for some taxpayers would decrease, shifting the burden onto the others in the taxing districts. So, by decreasing the assessed value of personal property for some businesses, the new exemption allowed under HB 556 would be increasing the tax paid by all other property taxpayers.
Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?
HB 556 would allow county commissioners to pick and choose winners through tax policy by exempting businesses that apply for a reduction in their personal property tax assessment. For each business that is granted an exemption, the property tax burden will go up for all other taxpayers in the county.
Additionally, HB 556 would shift property tax burdens across county borders. Idaho has some taxing districts that cross county lines (e.g., irrigation, auditorium, and community college districts). Thus, by exempting individual businesses in a portion of a district in one county, all other taxpayers in the same district would pay a higher property tax rate, regardless of which county they reside in.
This tax shift across county lines would foster taxation without representation. Since the commissioners from a different county would be the ones voting on the exemption, those who see their taxes go up in their own county would have no representation.
This analysis was changed 2/21/18 to more accurately reflect the impact of this legislation.