Friday, January 20, 2006

Remedy Idaho's double-whammy tax system

Gov. Dirk Kempthorne's sparse understanding of the local property tax crisis that besets some Idaho communities shows a certain contempt for financial ordeals struggling families are enduring in high-growth places like Blaine County.

His State of the State address solution that disgruntled taxpayers should demand local government cut spending, not seek state remedies, comes close to the pompous wisecrack attributed to France's imperious Marie Antoinette.

When informed the impoverished French had no bread, she's credited with replying, "Let them eat cake."

Presumably, outraged taxpayers who understand the tax crisis more than the governor will turn out in force Jan. 30 for a special public review of proposed solutions to be considered by state Rep. Dolores Crow's Revenue and Taxation Committee.

Republican Rep. Dennis Lake, of Blackfoot, nailed the problem succinctly: the Legislature sets tax policies that local governments are tied hand and foot to follow. Is that too difficult for the governor to understand?

The most rudimentary illustration of inescapable state law in Blaine County is that the county assessor automatically is required to increase the valuations of homes near new luxury homes that crop up in older neighborhoods.

Thereafter come higher taxes.

While most homeowners weren't looking, 63 percent of the tax burden in Idaho has been shifted to the shoulders of homeowners. Predictably, as legislators explore some two dozen tax remedies, powerful business and agricultural lobbyists are lined up with crying towels and tales of woe to try heading off any attempt to shift some of the burden to them.

Legislators instead need to direct their sympathies to homeowners who've found taxes too burdensome and must sell their homes and move.

One tax that would provide the simplest and least painful remedy, but continues to be rejected by the Legislature, is a transfer tax—a modest, onetime tax on the sale of property.

With a virtual land and property boom under way in Idaho's resort areas, along with a rewriting of the state tax code to end skyrocketing valuations on old property, this revenue stream would be a cure.

It is not a tax on Realtors, but on buyers and sellers of property.

The argument that a transfer tax is an unfair cost to property owners is nonsense. The real injustice is the double-whammy blow of Idaho's senseless state-mandated assessment system that triggers higher valuations on older homes because of a new luxury home built down the block.

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