Red State Rebels: More bad news about Risch tax plan

First of all, it's not too late to sign the petition to ask the Idaho Legislature to hear the Democratic alternative property tax reform plan when it meets for its "special-interest session" two weeks from Friday. Surely there are more than 870 people (as of 9:07 a.m. today) that want to make sure we have a full debate on this issue.

Also, courtesy of my state Sen. Elliot Werk, here is the full text of an article by Dean Ferguson that appeared a few days ago in the Lewiston Tribune about a University of Idaho study that shows just how bad Risch's "tax relief" would be for most Idahoans. Emphasis added is mine.

Gov. Jim Risch's property tax reform plan cuts taxes for businesses and raises taxes on everyone else, according to a University of Idaho study released Friday. The study also predicts a shift away from high-paying jobs to low-paying jobs.

"Since Gov. Risch called for a one-month-long debate on this issue before the Legislature meets Aug. 25, I thought it important to bring these studies to the public's attention as soon as possible," said Stephen Cooke, associate professor of UI's agricultural economics.

Cooke analyzed who the winners and losers will be if the Legislature shifts $260 million off property tax rolls and into the general fund. The governor, who has called a special legislative session, proposes paying for the shift with a 1 cent sales tax hike and surplus money.

Cooke found low income people will see the biggest tax increase, but everyone will feel some of it.

"It's safe to say all income groups (will be) paying more taxes," Cooke said.

Cooke figured landlords will pass half of the property tax cut onto renters, who will enjoy a $26 million decrease in rents. But a sales tax will force renters to pay $43 million more -- meaning renters will pay $17 million more, Cooke found.

Homeowners will pay $29 million more.

Businesses will be big winners, he found.

With property taxes cut by $130 million, they will pay only $33 million more in sales taxes -- a tax cut of $97 million.

Cooke noted too, that industries such as retail trade and agricultural will get the biggest tax decreases. Retail will get a $39 million decrease and agriculture will get an $8 million decrease.

"A big portion of the property tax decrease goes to retail and agriculture so they become more profitable and they can expand and lower prices," Cooke said.

Retail will add 599 jobs and agriculture 525, his study predicted.

However, government, food service, construction and professional service sectors will shed jobs, he found.

The good news is the tax shift will create 2,660 more jobs. The bad news is real wages will drop by 0.3 percent, Cooke said.

Cooke also found that the $210 million in sales taxes will not boost revenue to the state enough to cover the tax shift.

"After the economy equilibrates, there's going to be a $41 million deficit."

In Cooke's analysis, legislative leaders are attempting to fix a problem with a "broad-brush approach" that will make matters worse.

"The property tax is not fair -- there's no doubt about it," Cooke said. "But the Legislature, in my view, won't do anything to make it more fair. All they do is cut it."

Cooke has sent his findings to all of the state's senators, the governor's office, the District 6 delegation and media outlets.

He hopes his findings will spark debate before leaders meet in three weeks. The governor has said he already has the votes he needs to make his plan law.

But, if the idea is really to give people tax relief, the governor's proposal will do the opposite, Cooke said.

"It's most unfair for low-income renters and owners."

Cooke's study can be found at www.agls.uidaho.edu/scooke/research.htm.