Republican leaders are considering whether to eliminate or phase out in the state budget a 170-year-old property tax that generates — mostly from businesses — a quarter billion dollars a year for municipalities and schools.
Business and conservative groups have been urging elimination of the so-called personal property tax for years and several small business owners spoke out last week at a public hearing in favor of a Republican bill that would exempt everything subject to the tax.
But the bill comes with a steep $261 million annual price tag that could make it difficult to pass during a contentious budget year in which resources are scarce. Under the proposal the state would reimburse municipalities and schools with general tax dollars that otherwise could pay for education, transportation or other tax cuts.
A spokeswoman for Senate Majority Leader Scott Fitzgerald, R-Juneau, said in an email the proposal “is certainly still on the table for this legislative session” and “as budget deliberations continue, further discussions about this measure will be guided by the amount of available revenue.”
Rep. John Nygren, R-Marinette, said in a statement that many of his Assembly Republican colleagues are interested in repealing the personal property tax.
A spokesman for Gov. Scott Walker said eliminating the personal property tax is “a proposal worth considering” but Walker does not want it to come at the expense of cutting property taxes for homeowners.
Homeowners are familiar with the annual tax bill on land and permanent structures, but they generally aren’t affected by the personal property tax, which has been around since 1849 and is assessed for non-residential properties on certain tangible items such as furniture, boats and machinery.
Over time, the state has exempted broad swaths of property from the tax, including computers and cash registers, which has led to complaints from businesses that the tax is unfair.
Those who have to pay it are required to determine each year the value of their personal property, which depreciates over time.
Jerry Martell, owner of Modern Disposal Systems in Sparta, told the Assembly Ways and Means Committee on Thursday the roughly $11,000 a year he pays in personal property taxes on his equipment could help him expand his business or hire more youth interns.
“If I get this money back, I’m not going to stick it in a bag and run down to the Carribbean with it … I’m going to put that money back into the economy,” Martell said. “I don’t think it’s right for me to pay this knowing it’s an unfair tax.”