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House Bill 481 — Property tax reduction

House Bill 481 — Property tax reduction

Parrish Miller
January 28, 2022

Bill Description: House Bill 481 would increase the number of homes eligible for the circuit breaker program, which spends general fund dollars to reduce some homeowners' property taxes, by raising a statutory limit. 

Rating: -1

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?

Idaho maintains a redistributive program for property taxes. This is the circuit breaker, which is for homeowners with an income below 185% "of the federal poverty guidelines for a household of two" and a home with an assessed value of no more than 125% "of the median assessed valuation for all homes in the county receiving the homestead exemption." These homeowners can qualify for a special property tax break that is offset by general fund dollars transferred from the state to the county where they reside.

The primary problem with this program is that it does not reduce tax collections, it merely reallocates the burden among various taxpayers. It pays for the tax reductions given to some homeowners by requiring taxpayers in general to make up the difference. This tax shift allows lower-income homeowners to pay lower property taxes by forcing other Idahoans to pay more through the sales and income taxes. 

House Bill 481 would amend Section 63-705, Idaho Code, to expand this redistributive program by increasing the value of qualifying homes to "the greater of three hundred thousand dollars ($300,000) or one hundred fifty percent (150%) of the median assessed valuation for all homes in the county receiving the homestead exemption." This increase only compounds the negatives of the program and will likely result in an additional $1.1 million in wealth redistribution. 

Property taxes should be reduced uniformly, with the reductions in revenue paid for by reducing government spending. It is inappropriate to reduce a small subset of property owners' taxes at the expense of other taxpayers.


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