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Senate Bill 1259 — Property tax, medicaid income

Senate Bill 1259 — Property tax, medicaid income

Parrish Miller
February 3, 2022

Bill Description: Senate Bill 1259 would increase the number of homeowners eligible for the circuit breaker program, which spends general fund dollars to reduce some homeowners' 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 maintains a redistributive program for property taxes. It is known as 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 tax.

Senate Bill 1259 would amend Section 63-701, Idaho Code, to expand this redistributive program by excluding from the program's income limits "payments that the claimant received as an enrolled Medicaid provider from the medical assistance program" in the case of "a claimant who owns and whose homestead is a certified family home as defined in section 39-3502, Idaho Code.” This change would expand the circuit breaker's wealth redistribution by an estimated $354,000, according to the calculations used in the bill's fiscal note. 

It should be considered, however, that the estimated increase in wealth redistribution caused by passing this bill could be substantially higher if other bills introduced this session to expand the circuit breaker program also end up becoming  law.

Property taxes should be reduced for all taxpayers, 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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