Property Tax Q&A

Property tax has long been described as America’s most hated tax. This fact was reinforced last month when Idahoans received their property tax valuations from the county. I have since received many questions regarding Idaho’s property tax. Some of the answers might surprise you:

Q: Is property tax really fair?
A: No. A tax system that is fair to every citizen does not exist.

Q: Isn’t property tax an invasion of private property rights?
A: Evidently our Founding Fathers didn’t think so. Property tax was the major source of income for the American Colonies to finance the Revolutionary War. After we won our independence, it was continued as “a feasible source of local government revenue and equal taxation of wealth.”

Q: Why do my property values go up just because my neighbor sold his property for a high price?
A: County assessors have little choice since the Idaho Constitution requires that all property be taxed at its fair and just value. Although assessors consider many factors in determining the value of property, sales of comparable property are a major factor in determining a property’s value.

Q: If my property values went up 50% this year, would my tax assessment this fall also rise 50%?
A: No. Only the portion of property taxes allocated to the public school maintenance and operations (M&O) increases in proportion to the increase in value. State laws place rigid restrictions on how much cities and counties can increase their budgets. If the value of all property in the county were to increase 50%, the tax rate would be reduced to limit property taxes.

Q: Wouldn’t I just be better off to move to another state where property taxes are lower?
A: Good luck. Idaho’s property tax burden is lower than five of our six neighboring states. Wyoming’s oil reserves keep its taxes lower than other states.

Q: Will the Idaho Legislature have a special session this year to reduce property taxes?
A: Yes. At least that is my prediction. All three of your local legislators voted in favor of property tax relief during the last regular session. Although the legislation failed in the Senate by five votes, Idaho’s strong economy and budget surplus should persuade the needed votes to shift the school M&O portion of your property tax to the state.

Q: Didn’t the Idaho Legislature already provide property tax relief this year?
A: Yes. The Legislature increased the homeowner’s exemption from $50,000 to $75,000, but this measure did not reduce overall property taxes, it simply shifted the burden from homeowners to business and agricultural property. Removal of the school M&O will provide property tax relief for ALL taxpayers.

Q: If we eliminate the school M&O, will our public schools lose that funding?
A: No. The M&O portion of the property tax that has been going to schools will be replaced from the state’s General Fund. The Legislature will use the state’s budget surplus in combination with a possible increase in sales taxes to make our schools whole.

Q: How much will my property taxes go down if the public school M&O is eliminated?
A: That depends on the county in which you live, whether or not your property is within the city limits, etc. But most property owners in Madison and Fremont counties should see a 15% to 25% reduction in their property taxes!

Property tax is obviously a complex issue. Let your legislators know your opinion before the special session is convened.