April 09, 2006

Bad Arguments for Property Tax Repeal, Idaho Style

This blog has recently discussed the shell game that anti-tax lawmakers frequently play with the property tax: the basic argument is that fixed-income homeowners (and especially seniors) are getting hammered by growing property taxes, so we should...cut property taxes for every homeowner. Here's another example of this fallacy from Idaho, where lawmakers have been fighting over how to provide property tax relief for about six months straight. State Representative Ken Roberts lays it out for us in the Lewiston Morning Tribune (helpfully republished by Idaho Public TV).
First he lays out the problem to be solved:
Many of our residential property owners are especially overburdened. Property valuations are rising exponentially...Last year, statewide property valuations increased an average of 14.4 percent. In Valley County alone, the valuations increased an incredible 44.2 percent.
Fair enough. Home values are growing, although part of that is due to a building boom around the state. When you build a new subdivision, your district's valuation will shoot up-- and it should. Still, there's a basic problem with the property tax in its purest form, which Roberts correctly identifies next:
The property tax assesses people based on property value. The property tax is blind to how much money a person makes from year to year. Property assessments go up even if your income goes down.
Absolutely right. Roberts deserves kudos for identifying this basic disconnect between the property tax and a homeowner's ability to pay it. But his response to this problem is dead wrong--he just assumes there's nothing you can do to fix it, so we ought to just repeal it and rely on the sales tax instead. Of course, as we've argued ad nauseum, there is a way of fixing this flaw in the property tax--a circuit-breaker style property tax credit-- and Idaho already has one (for senior citizens only). An honest assessment of Idaho's property tax woes would at least discuss whether expanding the circuit breaker to become an all-ages credit might be a smarter alternative. Given that Idaho lawmakers (including Roberts) recently voted unanimously to increase the elderly circuit breaker (the bill's currently on the governor's desk), it seems unlikely that Roberts is just unaware of this sensible, targeted property tax relief alternative. So why doesn't he mention it?

The always-handy Wikipedia defines a shell game as "a situation in which conspicuous actions are taken to cover up deception." Is this what's going on here? You be the judge.


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