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House Bill 552 — Disabled veterans, property tax

House Bill 552 — Disabled veterans, property tax

Parrish Miller
March 2, 2020

Bill description: HB 552 expands the definition of veterans who are eligible for a special reduction in property taxes.

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 code reduces the annual property tax owed by "a veteran with a service-connected disability of one hundred percent" by up to $1,320 or the total property tax bill, whichever is less. This is known as the Circuit Breaker program. 

HB 552 expands this tax policy to include more individuals. Specifically, the circuit breaker would be available to veterans with "a disability rating based on individual unemployability rating that is compensated at the one hundred percent (100%) disability rate, as certified by the United States department of veterans affairs."

According to the bill's fiscal note, this expanded definition would allow approximately 1,091 additional disabled veteran homeowners to participate in the Circuit Breaker program. The fiscal note estimates an average benefit of $900, with a total cost to the state treasury of $982,000. If each homeowner received the maximum benefit, the cost would be approximately $1.44 million. 

The problem with this proposal (and other similar targeted tax breaks) is that it pays for the reductions not by requiring the government to tighten its belt accordingly, but by requiring other taxpayers to make up the difference. This is because it uses general fund dollars to cover the cost of the circuit breaker. In other words, it's not really a tax reduction at all; it's a tax shift.

An equitable tax cut is a laudable policy, but a tax shift that benefits some taxpayers at the expense of others is an unacceptable form of wealth redistribution. 


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