The wonderful humorist, Mark Twain wrote that "The
only difference between a tax man and a taxidermist is that
the taxidermist leaves the skin." I feel his pain. And
there could be much more pain ahead for those in our area. Not
only is our federal and state income tax day right around the
corner, but our school district is asking for a $31.1 million
dollar levy and there's talk of another jail bond coming soon
as well. Pouring salt on this taxation wound, North Idaho
College is considering the use of forgone taxes to purchase
land for the Education Corridor. They hold the right
to $2.6 million in foregone taxes.
Now, as voters, we have a voice on the school levy and jail
bond issue, but when it comes to foregone taxes, we've got
nothing. And what in the heck are foregone taxes, anyway? Most
people have no idea, so let's go over the basics.
Here's a great explanation of foregone taxes, written by
my friend Dan Gookin:
"Taxing entities in Idaho can budget for the following
year using this formula:
Highest of the last 3 year's budgets + new construction
values + 3% = maximum budget for following year
So say a taxing entity has had previous years budgets of:
They can set the next year's budget to $1,100,00. Then they
add in the value of new construction on the property tax rolls.
Say that's another $100,000, so you have $1.2M for next year's
budget. They don't have to, but they can take up to 3% over
that: $1.2M x 3% = $36,000. So the next year's budget can be
as high as $1,236,000.
When they don't take the full 3%, it becomes "foregone." Not
gone-gone, but foregone. Which means gone but not forgotten.
Every year that they don't take the full 3%, they get to have
that "remembered." So if they don't take 3% for 3
years in a row, they have stockpiled a 9% increase in foregone.
Yeah, that would hurt when times are tough.
By taking foregone they obviously increase their budget.
They can then use that higher budget to base higher budgets
for the years to come. It never goes away. They find a way
to spend it instead of cutting back and giving the taxpayer
Thanks, Dan, that's a clear but frightening report on a
complex subject. It brings to mind the chagrin of political
humorist PJ O'Rourke, when he said "Giving government
money and power is like giving car keys and whiskey to a teenage
The general thought about foregone taxes is that they should
be held for emergencies only; they're not for optional projects
or ongoing basic costs. (I think they should get rid
of them entirely, but that's just me.)
NIC is not the only taxing entity holding foregone taxes,
though they are the only group to have cashed them in recently. They
took foregone a few years ago for salary increases and many
people were outraged because it seemed an inappropriate use. The
purchase of the mill site does not appear an emergency either.
Hold onto your wallets, people, because Kootenai County
also holds $2 million in foregone taxes and the City of Coeur
d'Alene has $1.1 million in foregone. We can only hope
they use great caution and restraint. The natives are
Feeling a bit overwhelmed right now? Maybe you should
take heed of the old Beatle's song, "Taxman!" It
goes like this:
Let me tell you how it will be;
There's one for you, nineteen for me.
'Cause I'm the taxman,
Yeah, I'm the taxman...
If you drive a car, I'll tax the street;
If you try to sit, I'll tax your seat;
If you get too cold, I'll tax the heat;
If you take a walk, I'll tax your feet.
Have a nice day.