Idaho

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Map: Who Benefits Most If Idaho’s Business Personal Property Tax Is Eliminated

In 2011, more than 53,000 Idaho companies paid the business personal property tax. Half of those businesses paid less than $90.

Who stands to benefit from getting rid of the tax? Click around the map to see the top five payers in each county. The darker blue counties are more reliant on the personal property tax. The map ranks their reliance by number.

Data Source: Idaho State Tax Commission | Map: Emilie Ritter Saunders | Download the Data

Idaho’s business personal property tax is often portrayed as the scourge of small business owners. It’s described as burdensome and unfair.

The Idaho Association of Commerce and Industry (IACI) has fostered those characterizations in its formidable push to repeal the tax. It’s a message that appears to have traction. In his State of the State address, Gov. C.L. “Butch” Otter said he believes there’s a consensus among lawmakers that eliminating the tax “should be a priority for this legislative session.”

The governor did not specify how the Legislature should go about getting rid of the personal property tax, but he did set aside $20 million in his budget to offset the losses local government will bear if the tax is repealed. In 2012, the personal property tax generated more than $140 million for cities, counties and local taxing districts.

Given all of this, we wondered: Who will gain if the personal property tax goes away? This map has the answers. Along with the top five payers of personal property tax in each county in 2011, it shows the total number of payers in each county, the median payment, and the amount each county received in personal property tax revenue. The counties’ rate of reliance on the personal property tax is based on a recent report from the Idaho State Tax Commission.

The data tell a pretty interesting story. In Ada County, Micron is the top payer. If the personal property tax goes away, so does the company’s $2.9 million personal property tax bill. MP Mask Technology Center, LLC — a joint venture of Micron Technology, Inc. and Photronics, Inc. — has the third highest personal property tax bill in the county, at more than $900,000. Photronics, Inc. is itself the county’s fifth highest payer.

In one county alone, Power County, J.R. Simplot Company would be relieved of a $1.7 million personal property tax payment if the tax is eliminated. That’s more than 60 percent of the county’s personal property tax revenue.

We publish this map with one big caveat: It’s not complete. It does not include the personal property tax dollars that come from a category called “operating property.” That’s the term for property owned by entities like utilities and railroads. Unlike other kinds of property, which are locally assessed, operating property is centrally assessed by the Idaho State Tax Commission.

In 2012, more than $42 million of the nearly $141 million in total personal property tax dollars paid in the state were paid on operating property. That $42 million is not accounted for in our map, because the tax commission has not compiled operating property tax payments by company and county.

There is a workaround. Analysis by the Idaho Center for Fiscal Policy’s Mike Ferguson based on Tax Commission data shows which operating property tax payers will benefit most if Idaho’s business personal property tax is eliminated. At the top of the list is Idaho Power, which paid about $10.5 million in personal property tax in 2012.

That $10.5 million is based on the Tax Commission’s judgment that 55 percent of electric utilities’ total property is personal property. IACI is pushing for that rate to be bumped to 80 percent. That would result in greater savings for electric utilities if lawmakers eliminate Idaho’s personal property tax.

The table below shows the 10 centrally assessed companies that stand to gain the most if the tax goes away, and if the higher percentage of electric utilities’ property is categorized as personal property.

Operating Property Tax Payers That Will Benefit Most
CompanyPotential Tax Savings
Idaho Power$15,372,835
UP Railroad$5,431,319
Avista$4,897,796
Pacificorp$4,634,867
Qwest$2,850,015
Northwest Pipeline$2,682,262
Intermountain Gas$2,179,244
Gas Tansmission NW$1,754,655
United Water$1,082,325
Frontier$1,002,664

Data Source: Mike Ferguson, Idaho Center for Fiscal Policy

By exempting the first $100,000 worth of personal property, lawmakers could free nearly 90 percent of personal property tax payers from paying the tax, while still allowing local government to retain 80 percent of the revenue. But IACI, Idaho’s most powerful business lobby, is pushing to get rid of the tax entirely.

Listen to our two feature stories on Idaho’s business personal property tax here and here.

Comments

  • Wonton

    I’m wondering who will lose if we get rid of the tax. Schools? Where will the budget be cut? And if in the future we need more tax funds, which taxes will be increased? Historically, Idaho has raised sales taxes. Will that happen again? Or will home owners be stuck with higher property taxes so that corporations don’t have to pay?

    • http://profile.yahoo.com/WATELTW46DG7PSBDITJYNMHNAM Truman

      Sadly, very few people seem to understand the nature of a “corporate tax” – corporations don’t pay them! The same way that tariffs merely increase the price of imports (everyone knows that is the stated goal of tariffs – how come this logic doesn’t apply to when we talk about corporations?) The cost is simply deferred to the consumer. Without a corporate tax, more of the profits may be reinvested or more new people could be hired.

  • Proud_Idahoan

    The Legislature will not pass a complete repeal because it would be very damaging. Schools and community services (e.g. policy and fire protection) would suffer, while real estate property taxes would rise to fill the gap. Check out this educational video from the Partnership for Idaho’s Future: http://youtu.be/mtO1oPvgRRo

  • 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 the 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

    • http://stateimpact.npr.org/idaho Emilie Ritter Saunders

      Thanks so much for the great questions — we’re looking into this!

  • doctord@hotmail.com

    looks like it is time to start taxing churches for property taxes. there is plenty of revenue to be found from taxing real estate owned by the churches.

  • http://twitter.com/DigitalFunding Content Monetization

    “Half paid less than $90 dollars”. I would bet that the cost of compliance for most of them exceeded $100 dollars in time effort and distraction.

    Small business needs the breaks. Big business has their lobbyists – they are not bribing officials to create a level playing field.

    Small free enterprise needs the breaks, then the economy will grow and wages too.

    • BRR

      Cost of compliane is minimal as a bookeeper or bookeeping program that enters each purchase or sale of equipment is mostly a sunk cost.

  • Robert Carroll

    Looks to me like another corporate tax break

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