Idaho

Bringing the Economy Home

Explaining Idaho’s Personal Property Tax, With A Little Help From A Boise Candy Store

Molly Messick / StateImpact Idaho

Debbie and Joe Giordano, of Powell's Sweet Shoppe in Boise

Governor C.L. “Butch” Otter and many of the Idaho Legislature’s Republican leaders are in agreement: something has to happen on the personal property tax this session.  And by “something,” they mean a plan to get rid of it.  But there’s a problem.  The tax generates $140 million dollars each year for local government.  In this story, we start at square one: explaining this thing called the personal property tax.

  Here’s the full transcript:

MOLLY MESSICK: Say you want to understand Idaho’s business personal property tax.  If you’re the studious type, you might look for a technical definition.  You’d go to Idaho Statute and you’d find that, “Personal property means everything that is the subject of ownership and that is not included within the term “real property.”

That doesn’t help much, does it?  So let’s try for a practical understanding, and take a field trip somewhere sweet.

DEBBIE GIORDANO: These Goo Goo Clusters are the first original mixed candy bar…

MESSICK: Yes, a candy store.  Powell’s Sweet Shoppe, in east Boise.

GIORDANO: We have the old Slo Pokes, the Chick-O-Sticks…

MESSICK: Debbie Giordano owns it with her husband, Joe.  This place is an homage to things spun from sugar. We’re in a section called “Memory Lane,” full of old time sweets. Next door is the “Theater,” stocked with boxes of candy. A screen plays Charlie and the Chocolate Factory on a constant loop.

MOVIE: Open it, Charlie, let’s see that golden ticket!

MESSICK: There are props and decorations everywhere.

GIORDANO: You’ll notice all of the different Candy Land games.

MESSICK: Giordano points to an antique board game, high in a corner, and I remember I’m here on serious business.

MESSICK: Are you paying personal property tax on that?

GIORDANO: Yeah, actually, we are! Seriously, it’s part of our store décor! We pay personal property tax on that.

MESSICK: Giordano laughs, but she’s not thrilled about the personal property tax bill she and her husband receive each November. It totals a few thousand dollars. Every year, they pay taxes on all of the little things they own in this store that are assets to their business.

They don’t pay it on the candy. That’s inventory, and it’s exempt. But the baskets and the trays and the shelves that hold it?  Those are taxed. So are the scales and cash registers, and the big glass display case that holds 24 flavors of gelato. The list goes on and on. Giordano says she was shocked the first time the personal property tax bill arrived in the mail.

MESSICK: Did you understand the definition of personal property?  Like, did you even know that this was a category that existed?

GIORDANO: I had no idea!  I mean, it would be like a homeowner buying a kitchen table, and then a bill coming every year to pay a tax on it because you’re using it in your home.  I mean, it seems kind of silly.

MESSICK: Giordano’s personal property tax bill came from the county assessor’s office, from this person.

RACHEL BAIRD: I appraise personal property for taxation.

MESSICK: Rachel Baird, a personal property tax appraiser for Ada County.

BAIRD: So I have to look at what a business owns and decide how much it’s worth – what its value is for property tax purposes.

MESSICK: Baird’s job is technical, but it’s also full of fireworks. That’s because there are a lot of Debbie Giordanos out there: new business owners who have never heard of business personal property, and don’t know they’re about to be asked to pay a tax on it. Then they get a letter from the county assessor’s office.  That’s when the phone calls start.

BAIRD: I could almost word-for-word repeat a phone conversation to you.  They’re almost always the same. They want to know, “What is personal property?”

MESSICK: Then they ask: “Why am I supposed to list this?”  “What am I supposed to list?”

BAIRD: And then I get the question, and everybody says this: “Wait a second!  This is for taxes?  I have to pay you taxes on all this stuff?  I already paid taxes on this.  And that’s my fun job to be able to say, “Yes you did!  That was sales tax.  That goes to the state.  And now you have to pay property tax that goes to the county.”

MESSICK: Everything you’ve heard so far sums up some of the main complaints leveled against Idaho’s business personal property tax: It’s a burden for small business owners. It’s hard to administer. Idaho’s most influential business lobby, the Idaho Association of Commerce and Industry, is leading the charge against the tax. These criticisms could have come straight from their talking points.

But if you look at the numbers, it’s not small businesses that pay most of the personal property tax dollars collected in Idaho. Half of the personal property tax payers in the state pay less than 90 dollars each year.  The big payers are utilities, railroads and big businesses, and the taxes they pay support local government all over the state. That’s why some community leaders believe fervently that the state should not go through with a full exemption. Dallas Clinger is one of those local leaders. He lives in Power County, in eastern Idaho. It’s one of the counties that will lose the most if its personal property tax revenue disappears.

DALLAS CLINGER: The benefit that we will get is nil, and the cost that we will sustain is huge.  And it’s a benefit to those small number of big businesses that we have in our state that wield a lot of power in Boise.

MESSICK: Clinger is afraid lawmakers and the public haven’t thought through the effects of entirely exempting personal property.  We’ll hear more from Clinger, and from Power County, tomorrow morning.

For StateImpact Idaho, I’m Molly Messick.

Listen to our second story in this two-part series here.

Comments

  • BRR

    Can someone tell me if this sequence is typically correct?

    1. Idaho businesses buy much of their equipment and supplies sales tax free under Idaho’s Sales Tax Exemptions and Exceptions which total $1.8 billion a year.

    2. They then take that tax-free cost of the equipment as a tax deduction on income tax returns as a business expense.

    3. During the life of the equipment they take a depreciation deduction

    Thank you

  • LDJ

    Take away the personal property tax and who do you think has to make up the tax shortfall? Well let me see…oh yes it’s the real property owner. So now your property tax bill will increase to cover the exemption for the big businesses. With Idaho Power who will receive a 55% reduction in there tax bill do you think your power will be reduced by that or by anything at all? It will be a TAX SHIFT to you.

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