Written by: Jim Hansen
Wednesday, March 12, 2008

There is a good case to be made that the administrative cost for small businesses to comply with the so-called "personal property" tax (on equipment, etc.) is not worth the revenue it generates. Big corporations have been able to handle it for decades and what they contribute to support Idaho's schools and other assets through this tax makes up for the fact that many of them don't pay sales tax on the purchase of equipment under the production exemption.

Lobbyists for the big corporations (Idaho Association of Commerce & Industry - IACI), however, need the sympathetic small businesses as their cover so they can get the entire "personal property" tax repealed. They don't seem the least bit concerned that a complete repeal will drain $120 million from Idaho's budget, will make it harder for Idaho to invest in assets that help everyone (like decent schools and public safety) and will shift more tax burden on individuals and homeowners. House Bill 599 does just that.

But this morning, a group of 8 legislators took the "small business administrative burden" rationale at face value and proposed amending the bill so that the repeal only applied to the first $50,000 of value. That would cover the vast majority of businesses and only cost about $10 million.

IACI panicked at the prospect of such an amendment. Big corporations need small businesses as their cover to secure this windfall. If the link is broken, it will be much harder to come back in future years to try to repeal the rest. They also know that this is an election year and that many legislators have accepted contributions from big corporations, their PACs and lobbyists in the past and will want to again this year. Most small businesses don't have the money to create a PAC let alone hire a lobbyist.

Enough legislators blinked and the amendment failed on a 8-10 vote. Siding with small businesses and the individual taxpayers of Idaho were all five Democrats plus three Republicans. All ten who sided with IACI were Republicans.

The bill still has to clear a vote by the full House (probably this Friday) and then be go through the Senate. Yesterday, a Senate committee, feeling the impact of a tight budget riddled with tax exemptions, voted to cut health benefits for retirees.

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