Tax relief remains atop legislators' goals
Three weeks ago, I explained the difference between three property tax proposals currently circulating in the Statehouse.
While each of these proposals addressed the subject in a different fashion, all had the overarching goal of reducing the tax burden that property owners in Idaho are experiencing. The introduction of these three bills (H77, H78, H79) led to broader discussions within the Legislature about the merits of each proposal.
What had originally been proprietary information was now available for other legislators, as well as the public, to read and ruminate on which then led to multiple opinions being formed about each approach. As these opinions began being shared, it became clear that only two of the proposals were considered viable by most of the Legislature.
However, with one bill being from a Senator, and another being from a House member, support for each has hardened along bicameral lines and little more agreement has been found. That being said, both bill sponsors are continuing to try and combine their ideas into a bill that most will agree on, in order to ensure something will pass both bodies of the legislature.
The discussions around property taxes have stimulated conversations regarding taxes in general. While most in Idaho are feeling the pinch of rising property taxes, our property tax rates, depending on the source, go anywhere from the third lowest to the fifteenth lowest in the country. While being third lowest gives credence to the argument that we have little to complain about, fifteenth lowest definitely can be improved upon. Nonetheless, some are postulating that our efforts should go into continuing to lower both corporate and personal income taxes, as opposed to property taxes.
In the special legislative session held last September, the Legislature passed a law that established a flat tax rate for both personal and corporate income taxes. This was a welcome move away from the injustice of a graduated income tax, and something that many legislators had been seeking to implement for over a decade. Although the law also lowered our overall tax rate, the drawback to the law was that the rate was noticeably higher compared to other states with a flat income tax. This discrepancy, along with a general theory of tax policy, is what is being presented as an alternative to efforts to lower property taxes.
As state government has steadily lowered the income tax rate for the past six years, we have seen a noticeable strengthening of the business climate in Idaho, as well as more disposable income. Although we are not having a problem with migration into the state, lower income tax rates have historically proven to be a relocation incentive for businesses and individuals alike. A similar argument pertaining to personal wealth could be made for paying less property tax, but a more direct line can be drawn when lowering income tax. One of the strongest contentions for lowering, or eliminating, the property tax is the threat posed to property ownership if the taxes are not paid.
Our target date to adjourn is March 24, and as the session continues to move toward its conclusion, the urgency of these discussions grows. When arriving in Boise, many legislators had property tax reform at the top of their list, and I don’t believe that has diminished. Some of the parties involved are posturing that they are willing to end the session without property tax reform if they don’t get what they want in a bill, but I am confident an agreement will be reached.
Sage Dixon represents Bonner and Boundary counties in the Idaho Legislature in District 1B. He can be reached at sdixon@house.idaho.gov.