Politics: Guest Opinion
Idaho Big Business Wins, Taxpayers Lose - Again
By Ken Robison, Guest Writer, 3-07-08
Idaho legislators say the state can’t afford to phase out the sales tax on groceries but they are getting ready to pass a business tax cut that will ultimately cost $120 million a year in state revenue.
This means that more millions in taxes will be shifted to individual taxpayers.
This will be another step in a 30-year pattern of legislative policy: raising the taxes paid mostly by individual taxpayers and using the added tax revenue to give tax cuts to business.
Idahoans were told that it was necessary to raise the sales tax to six cents in 2006 to provide property tax relief.
Some legislators acknowledged that there was another purpose for the sales tax increase, to eliminate the personal property tax on business equipment and machinery.
The big winners with the $120 million tax cut will be the major corporations and utilities that run the industry lobby, the Idaho Association of Commerce and Industry. IACI lobbied for the sales tax increase and is the primary sponsor of the bill to phase out the personal property tax.
Why is business property tax relief a higher priority than grocery tax relief? Consider that:
● Over the last 10 years total residential taxes have risen 50 per cent faster than total property taxes and more than three times as fast as taxes paid on commercial and utility property.
● Over the last five years, while total residential taxes rose $220 million, taxes on commercial property increased $4.7 million and taxes on utility property went down $15.9 million.
● The $120 million tax cut is equal to one third of total commercial and utility property taxes for 2007, $360 million.
Idaho’s original 3 per cent sales tax was passed in 1965. This was followed by a significant tax cut for business, elimination of taxes on business inventory, timber products and livestock.
Additional business tax cuts in the 1980s reduced state revenue so much that the sales tax was raised to four cents in 1983 and five cents in 1986. Part of the revenue from the fifth cent was used for 1995 property tax relief that benefited commercial and utility property more than homes.
Following the advice of IACI lobbyists, from 1990 to 2005 the legislative majority rejected all attempts to adjust the upper limit on the homeowner exemption for inflation. This shifted millions in property taxes to homes and led to a tax revolt.
The upper limit was finally increased in 2006 but the inflation adjustment did not catch up to inflation in home values. After declining $66 million in 2006 total homeowner taxes increased $46 million in 2007 and are only $20 million less than in 2005.
Over the last 10 years total revenue from taxes paid primarily by individuals, the sales tax, individual income tax and taxes on owner-occupied homes, are up $1.5 billion, 105 per cent. Revenue from taxes paid primarily by business, corporate income tax and commercial property taxes, is up $131 million, 28 per cent.
There is a good alternative to the $120 million tax shift. The legislature could eliminate the personal property tax for 80 per cent of Idaho businesses at a cost of only $10 million by exempting the first $50,000 of personal property.
Some legislators favored another alternative, to reduce or eliminate other business tax breaks to pay for the personal property phaseout. This was rejected in committee. So now the plan is to shift more millions in taxes to individual taxpayers.
Ken Robison is a tax policy expert and former legislator who represented Boise’s North End district for 18 years.
Like this story? Get more! Sign up for our free newsletters.
Comments
Add your comment below
In a nutshell? Because it immediately creates more jobs. History repeatedly shows us this.
Also - although sensational - the way you present the numbers is grossly inaccurate. Because of the growth of the state over the past 10 years (especially the past 5 years), you should be presenting the numbers on a per capita basis, adjusted for growth.
For example:
"Over the last 10 years total revenue from taxes paid primarily by individuals, the sales tax, individual income tax and taxes on owner-occupied homes, are up $1.5 billion, 105 per cent. "
This is a huge DUH. In the last 5 years alone, rooftops in Kootenai County alone increased 30%+, population increased 10%+, incomes increased 9%+, values of real property increased 80%+, and tourism increased substantially. So in reality, 105% is inaccurate because it does not reflect that the additional $1.5 billion is not share by the same tax base whatsoever.
I'm absolutely pro elimination of the grocery tax - I just had to comment that you've boldly used partial stats and withheld pivotal stats in order to support your position. How about providing fully transparent information?
I see Christina is one of those that is capable of ignoring 90% of economists and listens only to Ben Stein and Larry Kudlow.
Given the current economic recession with thousands of people being laid off from the good jobs, and the service lousy jobs getting harder to find, taxing the citizens more while letting big corporations off the hook (not referring here to small businesses) will just add to the already diminishing tax base, period. Nor will this policy add good jobs during a recession, as you seem to think.
The lastest 'extaxaganza' along these lines is the legislature so far approving to give humongous tax breaks as a lure to the nuclear enrichment facility AREVA, owned by the French govt, and proposed for the INL area. The Leg proposes to give them even greater tax breaks than Micron got. The jobs promised are a joke--the good-pay jobs with AREVA will be filled by out of staters.
You gloss over the central point, IACI-like ("it immediately creates more jobs" Immediately?), and complain about irrelevant statistics that Robison didn't cite. If "per capita" changes the observation that the Legislature is continuing to shift taxes from business to individuals, show us how.
You desire what all Conservative business owner desires, which is higher profits without any acknowledgment of the community that helped you achieve those profits. Do you believe that by handing out 2% raises in the face of 12% inflation rates you somehow have benefited the society around you?
Trickle Down economics, aka Voodoo Economics, is fueled by the mythological belief that the upper class business owners will reinvest their profits into the community through higher wages and employment rates. Respectable economists have laughed that theory out of the classroom and out of most reasonable theoretical discussions. It should have been left by the side of the road to die in 1989, not shocked into life by Ben Stein wannabes like yourself.
What you don't really like about my response is that I gave a name to your BS. Thats just too bad, because this is an educated group, ma'am, not a bunch of yokels with no idea that tax-cuts for the rich don't move our economy forward.
1. Economic Recession? Media made, not reality, especially Idaho in particular. Job growth at 3 times the national average, annual household income increase of 9% in 2006/2007, an 'expanding' state because of growth. Do a simple google search, you'll find the facts.
2. Show me where Idaho legislation is going to tax the citizens more - and no, denying a tax break is not taxing more. I whole-heartedly agree that we should tax the citizens less - I do not agree that we should tax one group less and tax one group more. With that - I also have no problem with a higher sales tax (not on groceries) in order to fund lost revenue from lower taxation.
3. Let's keep this discussion to Idaho only since that's where it started.
4. You wanted facts from me? Here you go . . .
"Supply-side tax policy is the way to boost economic growth. Supply-side economics recognizes that tax rate reductions help the economy by encouraging people to produce more. The economic stimulus occurs because the tax penalty on productive behavior is reduced, not because there is more money in people's pockets. In other words, when lawmakers reduce marginal tax rates on work, saving, investment, and entrepreneurship, people have an incentive to produce more, which means more economic output and therefore more income available for both consumption and savings.
This explains why supply-side tax cuts, such as the Kennedy tax cuts in the 1960s and the Reagan tax cuts in the 1980s, are associated with economic expansions. The lower tax rates--as well as substantial reductions in the tax burden imposed on business--encouraged workers, savers, investors, and entrepreneurs to engage in additional productive behavior. More jobs were created and incomes rose." Heritage Foundation
"Economic capacity is built through the development, attraction and retention of scarce resources, human and other. The tax system alone cannot achieve these objectives but it certainly can serve as an incentive or disincentive.
A reduction in the corporate tax rate can attract capital. Research shows this has a positive effect on foreign direct investment. For SA companies, a reduced tax rate results in more profits, allowing companies to expand and create more jobs and buy better equipment." Financial Mail
More references: pajamasmedia.com, usatoday.com
5. Aside from these 2 (there are hundreds by the way) sources I've provided, if you are a business owner, you know immediately that tax relief to the business is essential to growth and expansion - both of which benefit the individual. Each year, as our profits increase on our businesses, we hire more employees, give more raises and provide more benefits. It's simple economics. It's not voodoo and it's not theory.
6. Of course Robison portrayed his stats consistently - consistently without supporting information showing growth everywhere else. Here is a very basic example even you can understand: An individual is paying 30% more taxes today than he was 3 years ago. Oh my gosh - this person is OVER TAXED (well yes I agree with over-taxed but that's not the point here). Robison has shared a number just like this. What he's failed to provide is the following: That individual's income increased 50% over the same period. That individual purchased a home over the same period. Both items hold tax consequences and while 30% sounds horrendous, what we fail to see (because of the way the numbers are presented) is that the individual has increased their networth by 40%. The actual additional dollar amount now paid? $900. The actual additional networth of the individual? $50,000. The actual additional income of the individual? $15,000. Well now - that 30% increase looks completely different when it's shown in perspective doesn't it? Robison didn't use any perspective, except his desired point that more TOTAL tax is being paid by individuals - but he didn't share that there are significantly more individuals - that prices have gone up on those things we pay taxes on - etc. Show it in perspective - that's my point. To just shout that taxes are abhorrent doesn't get us anywhere (I agree, but it doesn't provide the whole picture).
7. FYI the supposed "80's caused recession" happened AFTER taxes were CHANGED (aka increased) and some reversed in the "90's". I won't even go into the wonderful time period the 90's were.
8. Respectable economists disagree with each other every single day. Respectable economists are WRONG half of the time. Economists are about theory - the problem with economists are they are all too often proven wrong by reality. I see you are spouting 'reasonable theoretical discussions' - but again, reality is a bummer, it shows that 'reasonable theoretical discussions' are simply theoretical. Every single business owner I have ever met, myself, my family, my friends, etc. THOUSANDS of business owners - have always used a decrease in expenses to increase their business - always. Decreasing expenses DOES in fact, increase wages, benefits and employment rates. This isn't a theory, it's a fact - proven every single day, by every single business.
9. I most have missed something, I guess my education is less than yours. Apparently one needs more than a grad degree to be considered "educated" amongst all y'all - since I'm a local yokel that don't know nuttin.
FYI - this is NOT about tax cuts "for the rich". You need to step beyond your hatred and jealousy of those with more economic means than you to see that it is about tax reductions for businesses, that pay your salary and create jobs so you can provide a roof and food for yourself. All too many business owners are average 'middle-class' Americans trying to provide a roof and food for themselves, just like you. Let's see, that's 80% of American's by the way.
10. FYI - I am NOT a republican - nor am I a democrat. I am a libertarian (though NOT for Ron Paul) and I am for minimal taxation for everyone. I detest the argument that since we are not reducing the GROCERY TAX then we shouldn't be reducing business taxes. I detest the idea of stating numbers without full disclosure of surrounding impact on those numbers. I wholeheartedly am for everyone sharing the tax burden - especially in the spending arena. I detest property taxes, employment taxes, income taxes, use taxes, service taxes, etc. I am for just about anywhere in anyway we can reduce taxes - especially in areas that will increase and provide an economic stimulus. History has shown us repeatedly that tax reduction in all areas provides economic stimulus - both private and corporate. To argue otherwise is to show lack of historical knowledge and to continue an argument that exists only in "theory".
It's very apparent I'm talking to a group that is so blinded by the 'tax the rich'/'they are the evil and must be destroyed' theory that you'll never see anything beyond this. Until you realize that 80% of America are small business owners - that they are just like you - that they provide your ability to have a job - that they are not rich . . . Oh forget it. You'll never realize it because one of the liberal agenda items is to blind people to reality.
1) Economic Recession isn't determined by household income, which, incidently, has dropped significantly over the last 2 months. Analysis from top Wall Street economists, not Heritage Foundation morons can be found here. Try not to hurt yourself with the big words, Chrissy.
2) The money has to come from somewhere, Chrissy. It has been noted regularly that when the upper class and corporations are handed big tax cuts the money ends up coming from the middle class in the form of innocuous looking increases in other services and taxes (fuel taxes, sin taxes). Of course, in a Republican closed system, the money is just printed for free! (ignoring the heavy borrowing from competing countries like China)
3) No Chrissy, you took it outside of Idaho when you pushed the Voodoo Economics BS on this group. The greatest example of Voodoo economics is the Raygun era failures to provide for the lower classes without any acknowledgment from that administration that trickle down economics is nothing but a fantasy dreamed up by big-business Republicans that wanted their own pockets lined.
4) Pajamasmedia? You have got to be joking. Get a life outside of Conservativeland with Cheeto stained, military service dodging plagerizers. Sorry, that BS won't fly here either, Chrissy. We prefer reality. Oh, and USAToday hasn't been held in any sort of respect for a long time now. Try to keep up.
Facts? How about Raygun's economic adviser on the fact that Supply Side Economics (Voodoo Economics to the rest of us) is a trojan horse?
"The hard part of the supply-side tax cut is dropping the top rate from 70 to 50 percent—the rest of it is a secondary matter. The original argument was that the top bracket was too high, and that's having the most devastating effect on the economy. Then, the general argument was that, in order to make this palatable as a political matter, you had to bring down all the brackets. But, I mean, Kemp-Roth was always a Trojan horse to bring down the top rate."
That has to be the hardest thing for someone like you, Chrissy, to read that one of the original architects of your BS tells the truth once and it should have been the death knell of the whole movement. But instead people like you continue to try it over and over again. What is that called again? Oh yes, insanity.
But lets look at Paul Krugman, one of the top economics researchers in the world: http://web.mit.edu/krugman/www/virus.html
Or maybe Jon Chait:
"Chait exploits the eccentricities of this gang to cast doubt on their economics, a questionable tactic, but he rightly observes that the Laffer curve, better known now as supply-side economics, was promoted mostly by opinion writers and not by mainstream economists. In any case, Wanniski converted Representative Jack Kemp, and Kemp converted Ronald Reagan. Chait does not argue that the huge Reagan tax cuts were ill-advised. What he regards as ''deranged'' is the view that tax cuts are always and everywhere the best response."
The rest of your crap doesn't even deserve a response as it is mostly heresay without facts except for #9, which seems to hit the nail right on.
No Democrat in recent history would sign on to the ridiculous Laffer Curve without an ulterior motive. Your motive is that you want a more profitable business without supporting the community through taxes and fair-go economics.
/*** NEW YORK, March 12 /PRNewswire/ -- As economic conditions trend downward, consumer purchasing appears to be at an important turning point, the Deloitte Research Leading Index of Consumer Spending has found.
"The Index turned from positive to negative in real growth terms in January, indicating a much tougher environment for retailers in the months ahead," says Carl Steidtmann, chief economist with Deloitte Research and author of the monthly index.***/
American jobs slashed in early 2008?
Household debt at record levels?
January Inflation rates climbing fast? Due to fed rate cutting?
And anyone else that is tired of Chrissy impugning on your intelligence? All of this happened BEFORE. The widening chasm between the rich and the poor, the heavy burden of red tape, the image of low unemployment giving way to the realization that after years of voodoo economics that no one was actually capable of saving any money and the threat of bankruptcy was higher than ever.
Believing what someone writes (Robison) because the numbers are sensational and not calling that person to also supply surrounding information that substantially affects those numbers is heresy.
It is clear you have no intention of having a great discussion, nor do you care to learn or teach anything. Instead you'd rather try to bully, name call and be 'the loudest'. You've actually substantially refuted "binkyboy's" statement about 'this being an educated group'.
You appear to be attempting argument by exhaustion, but I'm more persuaded by getting to the point, and yes facts. The quote from the Heritage Foundation you put first is in the form of a profession of belief, not facts.
Your "counterexample" of a hypothetical example of how statistics could be used to mislead does not support your point that Robison's use was misleading. Your attempt is either confused, or deceptive. I'm willing to give you the benefit of the doubt, and assume the problem is with lack of clarity in your own thinking.
When you then follow up with a claim about your personal observation of "THOUSANDS of business owners," I am reasonably certain you have taken your desire to "demonstrate" your point into unbounded exaggeration, thereby being abusive in exactly the way you have ACCUSED but NOT DEMONSTRATED Robison of being.
Now, back to the discussion here -- which is not about "tax the rich" but rather about changing the tax structure to favor IACI's clients, at the expense of individuals.
You had a point? other than supply side economics is somehow going to make a recession go away, that somehow supply side economics in some magical fashion is going to do something other than what it has done for the last 6 years and the 8 years after 1984?
And Binkyboy spelled it out the best, you don't deserve the respect a debate would really entail. I'm sorry I didn't listen to him in the first place and that I tried to argue your points. You're regurgitating voodoo economics 101 without any historical vision, without any capability to understand liberal policies and the real effect they had in the '90s in combating the class warfare created by your precious "supply side economics".
How's that shrine to Bill Bennett coming along in your basement, btw?
You deserve nothing but scorn for your uneducated drivel, Chrissy. Your pretending to be a Democrat to gain even a slight amount of respect is clearly a ruse meant to give your Conservative freakonomic theories some sort of respectability in a liberal crowd.
Forbes: Boise One of the Best for Business and Careers"
The headline says it all. Hate business all you want but that is where the money and jobs come from.
Did you drop in from another planet, or what?
A little slow, eh Shawn?