HELENA, Mont. (AP) — The Gianforte administration is proposing tax cuts it says will help lure more businesses, and jobs, to Montana, in part to take advantage of the work-from-home movement precipitated by the coronavirus pandemic.
Opponents said the potential loss in tax revenue could lead to cuts in education, increased college tuition and fewer infrastructure projects that could make it less likely Montana would attract new businesses or workers. Low-income residents would receive receive little to no benefit from the tax cut, they argued.
The Senate Taxation Committee heard three bills on Thursday, including one to reduce the top-level income tax rate from 6.9% to 6.75%. A fiscal note accompanying the bill says the change will lead to the state collecting $30 million less in taxes each year.
The sponsor, Republican Sen. Greg Hertz of Polson, said the bill is a first step, in combination with another bill, aimed at setting economic triggers to gradually reduce the state's top income tax rate to 5% to better compete with other states in the region.
Opponents noted other states also have sales taxes, while Montana does not, and they questioned whether an income tax cut, once implemented, could be reversed if it turns out the cut isn't sustainable.
Because Montana's economy appears to be coming out of the pandemic better than other states, now is the time to reduce the top tax rate to attract entrepreneurs, said Kurt Alme, budget director to Gov. Greg Gianforte.
A bill to eliminate the business equipment tax on equipment valued at $200,000 or less passed the House Taxation Committee on Thursday. Currently, the tax is waived for the first $100,000 of equipment value. Legislative fiscal staff estimate the state will collect nearly $4 million less per year if the bill passes.
The governor’s overall tax and business proposal also includes bills to eliminate special interest tax credits and deductions, Hertz said.
The Senate Taxation Committee also heard a bill requested by the governor to eliminate capital gains taxes on the sale of stock received as a result of employment or serving on the board of a company once it has at least five years of new business activity in Montana, beginning on Jan. 1. There are also requirements for the location of corporate offices and employee residency. No cuts could take place until at least January 2026.
The committee did not vote on any of the bills that it heard Thursday.