Perhaps My Most Hated Tax

This may surprise you, because it is one that is seldom discussed, but perhaps my most hated tax is local (usually county level) business personal property tax.

Why?  The actual tax bill itself is trivial.  The problem is that the paperwork is incredibly irritating.  Essentially, by each location, we have to keep track of every computer, printer, vehicle, fax machine, filing cabinet, microwave, store shelf, refrigerator, trailer, lawn mower, leaf blower (etc. etc. etc.) we own and report the value of every asset by class of equipment and year of acquisition.  And then we have to report additions and deletions to these assets.  When you consider we operate in over 30 counties, this becomes a big pain in the butt.

The net effect is that it is an enormous hassle that results in very few tax collections.  Kudos to states like Florida, that have recently initiated exemptions for companies with asset totals under a certain number.  In a lot of states I would happily pay a slightly higher fixed amount of money in lieu of all the tracking and reporting.

  • irandom419

    It's the thought that counts.

  • joe

    My business personal property tax was $38. The administrative costs , collection, billing assessment of value, etc was probably 4x.

  • pbft

    This ties nicely to another common thread - these regulatory / paperwork costs are an increasingly large barrier to entry for small businesses. If anyone were really serious about growing the economy and increasing employment, stripping away this non-value-added cr*p would go a long way towards making it easier to get a successful business off the ground. Also - how about no corporate taxes for any business below a certain level? It costs us *way* more on paperwork and accountant's fees than we actually pay in taxes. I'll bet most small businesses are in the same boat.

  • Aheho

    My most hated tax is the Metropolitan commuter transportation mobility tax. Although I don't live in NYC, and don't use any of MTAs trains or subways, somehow the government feels it's entitled to $600+ of my income every year to cover costs over usage fees.

  • Dan Wendlick

    In my state, assets used for farming, mining, and manufacturing are exempt from personal property tax. This means that since we are a produce processor, we get to maintain three lists, and a single computer may land on any of the three depending on where it is located and if it has an email client installed on it. (a PC on the shop floor that interfaces to a piece of test equipment would be exempt as manufacturing equipment, until I install Outlook on it, making it a general business purpose computer and subject to tax)

  • STW

    Montana, where I understand people occasionally camp, has a business personal property tax exemption of $100,000. None of my clients have asked me where that multi-page form disappeared to after the exemption jumped a few years ago.

  • Don

    Yep, had to do this when I was running my company in the People's Republic of Travis County (Austin). It took WAY more time than my sales tax (even when I had to do TIFF taxes) and usually came to around $100/yr. What a pain in the ass.

  • Random Passenger

    Is there any way to work it out on the contracts and then have it described as GFE with something like a lease to own option and thus exempt from tax? Assuming all your contracts are government. After all, the governments sell their property all the time and then lease it back for a fixed amount every year.

  • LoneSnark

    The escape from feudalism originated with the rise of Freemen, who through a regular fixed payment of gold to the king became exempt from all the petty taxations of the various localities within the realm.

  • DaveK

    The worst I've run into is what is called an "intangibles tax." Basically, a personal property tax on financial assets. Any money in the bank, any securities or mutual funds, or other similar valuable asset gets taxed. The rate is relatively low, but the truth of it is that your principal is taxed and re-taxed each and every year. If you had a bad investment year and lost money, you still get hit with the tax.

    Probably not much worse than a business personal property tax, but for some reason I find it particularly galling. It's also quite often only enforced when the taxman wants to nail you for something else, and than throws that into the audit mix.

  • Peabody

    Wyoming's Annual Report Fee is a tax on all assets within the state, including the very first line on the worksheet is "cash". It is a very small percent, but I agree "particularly galling" is an appropriate description for taxing cash the business is holding.

  • DaveK

    I can (somewhat) understand the rationale for a tax like this on businesses (though I definitely don't agree with it). What I don't understand is why it is (or at least used to be) applied to personal taxes in states like Georgia, for example.

  • tommy ex thom w ex tomw

    Warren said:
    "Essentially, by each location, we have to keep track of every computer,
    printer, vehicle, fax machine, filing cabinet, microwave, store shelf,
    refrigerator, trailer, lawn mower, leaf blower (etc. etc. etc.) we own
    and report the value of every asset by class of equipment and year of
    acquisition. "

    If you have not instituted an inventory of capital(?) assets, and put it into a spreadsheet so it could be updated by discards, donations, purchases and trades then there's a task for one of your children to take up. In a way, not doing this may be cheating yourself of proper deductions and understating expenses.

    These items are part of your cost of doing business, and should be expensed, capitalized or amortized as appropriate. Once entered into an Excel sheet, tracking should be a simple task. How much churn is there year-over-year?

    I understand perfectly the pettiness of the tax and the required reporting, but why not make it as painless as possible?