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Biz Personal Property Tax Repeal Scrutinized

PHOTO: Idaho lawmakers are debating a possible repeal, or reduction, of the business property tax. A report from ITEP questions whether the biggest companies need a new tax break. Photo credit: Deborah C. Smith
PHOTO: Idaho lawmakers are debating a possible repeal, or reduction, of the business property tax. A report from ITEP questions whether the biggest companies need a new tax break. Photo credit: Deborah C. Smith
February 13, 2013

BOISE, Idaho - The Idaho Legislature is debating repeal of the personal property tax for businesses - and two new reports look at the impacts.

The Idaho Center for Fiscal Policy claims Idaho Power stands to benefit the most, seeing taxes fall by about $10 million to $15 million a year. The Institute on Taxation and Economic Policy (ITEP) says, according to disclosures to the Securities and Exchange Commission, Idaho Power already pays nothing in state income taxes to the states in which it operates.

ITEP executive director Matt Gardener said there may be corporate taxes paid to Idaho, but it isn't public information, although it would be prudent for lawmakers to find out.

"If there are major companies that are going to reap tens of millions of dollars in benefits from repeal of the personal property tax, are these companies paying anything in corporate income tax right now? Lawmakers don't know the answer; they should be able to."

It already has been a tough debate, with business lobbying groups pushing hard, but Gardener said cutting the tax would mean lower revenues for local governments and public schools. According to ITEP, Idaho Power's parent company reported $623 million dollars in profits from 2007 to 2011.

The personal property tax for businesses generates about $140 million each year. Gardener says eliminating the funding has a ripple effect not just on services, law enforcement and schools, but eventually on other tax rates.

"Anything you do to narrow the property tax base has the long-term impact of forcing local governments to increase property tax rates on everybody else," he said.

Gardener suggested that the personal property tax for businesses could be tweaked by raising the exemption to $100,000, which would help 90 percent of the state's businesses - mostly small companies - while only cutting revenue to local governments by 20 percent.

The ITEP research is available online at itep.org. The Idaho Center for Fiscal Policy research is at idahocfp.org.

Deborah Courson Smith/Deb Courson Smith, Public News Service - ID