The Inherent Inequities of Property Taxes
- 10 February 2008 by Author 0 Comments
The Inherent Inequities of Property Taxes
By Richard Larsen
Published – Idaho State Journal, 02/10/08
The Holt Arena is a tremendous benefit to Eastern Idaho, and the Pocatello area especially. As the home to ISU sports, the Simplot Games, the Dodge National Circuit Finals Rodeo, community events, high school sporting events, high school graduations, and concerts, it would be safe to say that we all have benefited from and enjoyed the Dome. Consequently, it was with mixed emotions that I witnessed the rejection of the proposed property tax increase to fund necessary enhancements to the facility.
It seems to me that the vote has nothing to do with the critical relationship between the communities of Pocatello and Chubbuck and Holt Arena. Instead, it has everything to do with already exorbitant property tax levels being required of the citizens of Bannock County.
Regrettably, the pattern for local leaders here is to always lay the burden on tax payers, and property tax-payers in particular. Whatever the cause, worthy or not, the tax-payer is the bottomless well the local leaders draw from to finance their projects.
The firm declaration from voters last week was, “enough is enough.” With Bannock County already struggling under the highest property tax levels in the state, local leaders went to the “well” one too many times. Yes it’s true that we benefit from the Dome, and we all enjoy the privileges with its presence in the community, but increasing property taxes was clearly not the answer.
Property taxes are perhaps the most inequitable and least forgiving of all the taxes imposed by government. It has no “ability to pay” provision. If you are unable to pay your property taxes, the government can seize your property. For those living on a fixed income, this is a genuine concern. Many of the letters to the editor regarding the bond election were from those with limited resources and income to subsist on. Although the purported $7 per month on property taxes may have not broken the bank, so to speak, on top of everything else it can be insurmountable for someone living primarily on Social Security and hoping every month they can make ends meet and hold onto their homes.
One additional inequity posed by the bond election was that there are many people who live in the county but own property in Pocatello or Chubbuck. Those people were precluded from voting on the bond proposal, even though their taxes on their property located within city limits would be affected based on the outcome of the election. Seems to me that there was a war fought a couple hundred years ago based on that same concept of taxation without representation. Not a good policy.
Usually, when the local taxing authorities demand more funding, another bond election is placed before the voters at the least opportune time. Not when the major elections are held to ensure high voter turnout, but on odd dates that will ensure a low turnout and the greater probability that the sponsoring entity can marshal its forces and assure approval of the bond. That is, until last week.
My father, Allan Larsen, was a gubernatorial candidate when the 1% initiative limiting property tax levels was placed before voters. He always maintained that there were two major quandaries with property taxes, one philosophical and one practical. Philosophically, property taxes create the perception that although we are ostensibly buying real estate, we’re instead just renting our homes from the government. Inability to pay our property taxes allows the government to take our homes from us, like the landlord that would evict us for failure to pay the rent. It seems inconceivable that in America where the promise of owning property could be so fundamental to us, that we keep paying the government for property that we’ve already paid for, and if we can’t, the government can evict us. Even long after we’ve finished paying off our mortgages, the government continues as a de facto landlord.
Practically, the worst position is reserved for business owners and landlords of rental units who must defray rising property tax assessments with higher prices and rising rental rates. Landlords and business owners are essentially tax collectors for local government, raising prices and rental rates to pay for ever increasing property taxes. They have no home-owner’s exemption that affords them protection of indexed rates on their taxes.
Property tax law changes in the past few years have created distorted incentives for our local units of government to raise their budgets. The Legislature removed the only state required property tax and replaced it with sales tax. The cities and county saw this as an opportunity to raise their budgets and did so to the tune of millions of dollars knowing that the public would not notice since their overall property taxes dropped last year. And true to form, Bannock County, and the cities of Pocatello and Chubbuck had massive increases in their property taxes this year gobbling up the tax relief the State provided by last years special session of the legislature. Now this year, our tax burden is higher because not only are we paying more sales tax, but our “property tax relief” was all spent by our cities and county. Consequently, property taxes have become even more of a millstone around the financial necks of home owners, small businesses, and renters. This requires much more attention in a future column.
There’s an aphorism that taxation is the art of plucking a chicken with the least possible squawking. In light of the double-edged sword of property taxes, it’s easy to see why they continually rile taxpayers. Taxes may be a necessary evil, but the most pernicious of all is the property tax.
Perhaps the generous Pappenberg donation of $1.5 million of Driggs real estate should be used as seed money for a capital campaign for Dome improvement in lieu of additional property tax imposition on home owners.
Dubby Holt was a pragmatist, and I can’t imagine him objecting to selling the naming rights on the Dome. He would have probably been the first to argue in favor of renaming the facility if Simplot or someone else were to make a sizeable donation to provide for the necessary improvements. Have you noticed that there’s no longer a Delta Center in Salt Lake City, but there’s an EnergySolutions Arena there that looks just like it?
Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board. He can be reached at email@example.com.