Wednesday, February 21, 2024

Gianforte signs property tax relief bill

by ERIC DIETRICH/Montana Free Press
| March 15, 2023 2:00 AM

Flanked by dozens of Republican lawmakers on the steps of the state Capitol, Gov. Greg Gianforte signed a tax cut, rebate and spending package totaling more than $1 billion Monday.

The eight-bill package, which provides short-term property and income tax rebates and also cuts state income taxes on an ongoing basis, puts a major slice of the state’s estimated $2.5 billion budget surplus toward what the governor called “the largest tax cut in Montana history.”

The bills also cut the state’s business equipment tax, pay off $125 million of state debt, restructure the state’s corporate income tax, streamline capital gains taxes and put $100 million into a highway construction fund.

“These are policies that will improve our business climate, grow our economy, create jobs and increase opportunities for Montanans,” said Gianforte, a Republican.

In total, the package will provide $764 million in tax rebates and reduce state tax collections by roughly $150 million a year on a permanent basis, saving taxpayers about $300 million over the state’s next two-year budget period.

Individual taxpayers will be eligible for up to $1,250 in income tax rebates for their 2021 taxes and homeowners will be eligible for up to $1,000 in total property tax rebates for taxes paid in 2022 and 2023.

The governor’s office said Monday that the income tax rebates would be credited to taxpayers automatically and that details will be forthcoming from the state Department of Revenue about how homeowners should apply for the property tax rebates.

The permanent income tax cut reduces the state’s top-bracket marginal tax rate from 6.5% to 5.9%. Another provision in the income tax bill expands the state’s version of the federal Earned Income Tax Credit, which reduces taxes due from low- and moderate-income working families. The governor’s budget office says the income tax cut is expected to reduce state revenue by about $150 million a year, while the earned income tax provision is expected to cost the state about $11 million annually.

This year’s cut follows the cut Gianforte and the Legislature made in 2021, which reduced the top-bracket rate from the 6.9% rate that was in effect when he took office. For individual filers in 2024, the new 5.9% rate will apply to income earned in excess of $20,500. Gianforte has argued that Montana needs to lower its income tax rates to remain economically competitive with neighboring states.

“Montana has one of the highest income tax rates in the Rocky Mountain West and the fourteenth-highest in the country,” he said. “This is hard on middle-class families and small businesses. Higher taxes mean less take-home pay, less job creation, greater burden on hard-working Montanans and more of our kids leaving the state.”

Montana is one of five states in the U.S. without a statewide sales tax. The state’s overall tax climate was ranked this year by the Tax Foundation, a national think tank, as the fifth best in the nation.

Democrats and progressive groups have criticized income tax cuts as providing disproportionate benefit to the state’s wealthiest residents, who have more taxable income in the top income brackets.

“These bills will result in a significant cut to our tax base, which is risky, especially with economic uncertainty on the horizon,” Montana Budget & Policy Center Director of Research Rose Bender said in a press release co-signed by 17 other progressive advocacy organizations.

Democratic leaders have also criticized the timing of the rebate package, saying it should have been left until later in the session, when lawmakers have a better sense for the cost of other spending priorities such as housing affordability efforts and shoring up health care and prison systems.

In a joint statement Monday, House Minority Leader Kim Abbott, D-Helena, and Senate Minority Leader Pat Flowers, D-Belgrade, described the package as “reckless spending that disproportionately benefits the wealthiest Montanans.”

“In the continuing absence of any real plan from the GOP, Montana Democrats will keep fighting to fix the crises facing ordinary Montanans,” they added.

At Monday’s event, Gianforte called for the lawmakers assembled behind him to also pass the remainder of his budget proposal, citing specific provisions that would provide a child tax credit, an adoption tax credit, fix the “broken” state hospital and prison system, set aside money for housing- focused infrastructure and fill a disaster mitigation fund.

“Our fiscally responsible plan invests in a stronger future for Montana. Let’s get it done,” he said.

This story originally appeared on Montana Free Press a

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