MTPR

'Capitol Talk:' Socialism, A Sales Tax, And A Swipe At Gianforte

Feb 8, 2019

Sen. Daines equates Democrats to Venezuelan socialists; Lawmakers hear a massive sales tax bill; And House Democrats take a not-so-subtle dig at Montana's U.S. Rep.

Sally Mauk, Rob Saldin and Holly Michels discuss these stories and more, right now on "Capitol Talk."

Sally Mauk: Welcome to "Capitol Talk" our weekly legislative analysis program. I'm Sally Mauk and I'm joined by Lee Newspapers Capitol Reporter Holly Michels and University of Montana Political Science Professor and Mansfield Center Fellow Rob Saldin.

And Rob, Montana's congressional delegation had a mostly predictable reaction to President Trump's state of the Union Address this week. But in an interview with Aaron Flint, host of the "Montana Talks" program, Sen. Steve Daines compared Democrats to Venezuelan socialists, following up on Trump's remark that America, "will never be a socialist country."

Here's what Danes said about Democrats' lack of enthusiasm for Trump's statement.

"You kind of wondered last night if, if we had two countries represented there: one the United States of America, and the other Venezuela. Socialism is a failed, it's a failed system that has been proven as a failure over and over again; and the latest case study is Venezuela. But that is the battle right now for the heart and soul of this country."

And Rob, I think we're hearing a 2020 campaign theme from Senator Daines. What do you think?

Rob Saldin: Yeah, totally. I would also say, I think you characterized the delegation's response as 'mostly predictable.' I would say totally predictable. Like everyone at the State of the Union, everyone has their role to play, and they play it. You know, there's a lot of faux drama at the State of the Union and there is a lot of drama in that interview with Aaron Flint.

You know, before we even get to the socialism bit; I found it entertaining when Daines kind of breathlessly recounts in another part of the interview what he called a "chilling moment" when he gazed across the aisle and was shocked to see only tepid enthusiasm among Democrats, right. I mean, the whole State of the Union has just become so farcical and performative.

But on the socialism point, it's clear that Daines has received a memo that the new talking point among Trump enthusiasts is to make this distinction between freedom-loving Republicans and socialist Democrats. And I think you're totally right. We have to view this as a preview or at least a trial-balloon for a major theme of the 2020 elections. And of course Steve Daines, his name is going to appear on the ballot just below, we assume, President Trump's.

And just on the merits of the socialism attack, it seems like pretty standard fare for Trump and his surrogates, in that it's not, like, totally without foundation. It's just that it's such a crude caricature. And so in that interview Daines specifically referred to Medicare for All and the so-called Green New Deal. And you know, if you look at that, an increasing number of people calling themselves democratic socialists. I mean you do see the center of gravity, I think, in the national Democratic Party has moved to the left. Right? There's a lot you could say about each of those points that complicate the matter, but it's not crazy to note that the Democratic Party does seem to have moved to the left. But that said, I mean obviously the Venezuela analogy seems just totally over the top. At some point in that interview it struck me that Daines kind of seemed to be joking, including in the clip you played. But then at other points it seems like he wasn't joking at all. But regardless, this sure sounds like a test run for a potential 2020 campaign theme.

Mauk: And it seems to me to mimic the Red Scare of the '50s. You called people communist back then, and now you're calling them socialists. But the connotation is that it's something anti-American, right?

Saldin: Totally. There's nothing new in this critique, right? I mean, I think typically it hasn't been deployed in such a, kind of, crude, caricatured fashion, right? I think that the last time it probably was, was back during the Red Scare. But it's always been there and I think Republicans go back to that because it is effective.

Mauk: It worked.

Back at the Legislature, Holly, the Montana House this week passed a bill requiring a two thirds vote instead of a simple majority to create or increase taxes. And the bill sponsor, Columbus Republican Forrest Mandeville, thinks it's needed.

"This bill does not prevent tax increases," Mandeville says. "What this bill will do is encourage bipartisanship and better policy if we do increase taxes or fees."

Not everyone agrees with him, Holly.

Holly Michels: So what Rep. Mandeville is saying, that he thinks there should be a higher threshold. He's arguing raising taxes or creating new taxes is a pretty serious thing to do and it needs a higher level of scrutiny. That's something a lot of Republicans run on; a promise of no new taxes. But we did see about five Republicans not vote for this bill, though it did clear the House.

Opposition from Democrats says that what this would do is prevent the state from being nimble in times of revenue shortfalls where you might need to act quickly to either increase existing taxes and fees or implement new taxes. There's about 15 other states that have similar requirements to this, although their thresholds are a little different. Democrats in opposition to the bill talked about some of those states such as Oklahoma and Arizona, saying that those states have seen some pretty steep cuts in their K-12 education system, and teacher strikes because of that. Mandeville tried to counter that by saying Oklahoma has a pretty high threshold of a 75 percent majority. There's a national group called the Center for Budget and Policy Priorities, and they've done a study that found people living in states with these kind of thresholds pay about the same percent of their personal income in taxes as states that don't have these. So it's sort of unclear what kind of impact this legislation would have. We'll see what the Senate does with it. Democrats were pretty solid in their opposition. And we do have some examples of just in the 2017 session we did face some revenue shortfall, and the state was able to act in response to that. So we'll see how this, you know, if it clears the Senate, what Gov. Bullock might do with it.

Mauk: Holly, lawmakers also heard a bill this week to create a two and a half percent sales tax, and this was sponsored by Republican Kerry White.

"We have all these visitors out of state putting pressure and impact to our infrastructure, and we're not capturing that money from them to pay for that," White says.

And Holly, he says it's needed to provide property tax relief.

Rep. White is carrying this bill. It's fairly massive, it's 426 pages. And he brought a similar measure in 2017. What he's proposing to do is eliminate some types of property taxes. He wants to get rid of all property taxes that aren't centrally assessed. So those ones that would remain are things that are charged on, like the refineries in Billings, or Northwestern Energy, those types of taxes would stay. But the ones that White's eliminating, he wants to replace that revenue with a 2.5 percent sales tax on most goods and services. Montana is one of just five states that doesn't have the sales tax.

The bill went to committee and it didn't have a fiscal note ready for it. And that would show what the nonpartisan legislative staff estimates the financial impact would be. So we're sort of operating on what White's saying without a lot of input from people who've examined it. But White thinks that this will end up eliminating about $1.2 billion in taxes from property taxes, But raise, on the other side, $1.6 billion from that sales tax.

And he wants to create five regional commissions that would look at what local government wants to do with the funding from this, and sort of weigh-in on their proposals. White does make the argument that this would give needed property tax relief, especially to older people who are struggling to stay in their homes as property values rise.

Mauk: But the bill has lots of opponents, including low-income advocates who argue, Holly, that it's too regressive, that it hurts low income people.

Michels: Yep, there are a lot of opponents to this bill who say it's regressive. There's a group called the Institute on Taxation and Policy that looked at this bill and they found that Montanans who earn about $18,000 a year or less already pay a higher percent of their family income to taxes, and that this bill would just increase the percentage that they're paying.

White does exempt some things like food that's covered under the Supplemental Nutrition Program; so not prepared food, but more ingredients. Also medical services and some other things. He's also proposing a holiday from the tax that would run from the 20th of October to the 20th of November. He's trying to say that this really is looking at tourism dollars and that this would give Montanans an opportunity to make big purchases in that gap between summer and winter seasons, let farmers buy a big equipment, that sort of thing.

Even opponents who spoke against the bill said that they really appreciate White trying to look at the state's tax structure, which a lot of people say really isn't set up to tax this sort of new economy that we're in now where wealth comes from things like medical services, accounting services, and less from things like traditional places, mining and agriculture. There was a committee that formed in 2017 when we saw revenue issues during that session to look at, you know, what Montana does and how it taxes this new economy. They talked a lot about things like, 'we really knew how to tax a Hastings' &emdash; you know, that rented videos &emdash; with property taxes, payroll taxes, that sort of thing. But we don't know what to do with Netflix, and how to tax that. That committee really didn't make any recommendations. And that conversation has sort of died down until White's bill came up.

Mauk: Well Rob, Montana has a long history of rejecting sales tax proposals. And the words "sales tax" are an obscenity to many Montanans.

Saldin: Yeah exactly Sally. You know this does come up every so often but it's definitely come to have, I think, just a little bit of a third rail character to it. What we've seen, I think, in recent years is the Democrats have sometimes used this to attack Republicans even when Republicans aren't necessarily embracing it &emdash; though obviously some do. But most notably I remember it was a pretty big issue back in the 2012 campaign for governor. Steve Bullock really hammered his Republican opponent Rick Hill for backing a sales tax, even though Hill hadn't supported a sales tax for a long time. That's kind of the dynamic.

You know I'd just add, as someone who's lived in several different states, including some of the most progressive states in the country, the anti sales tax sentiment on the left in Montana has always kind of struck me as a bit strange. The fact of the matter is that 45 states have a sales tax, including liberal strongholds like California and Massachusetts, New York, District of Columbia. And those rates are way higher than anything that gets proposed here in Montana. And on top of that, the concerns people have over having so much of the revenue stream come out of property taxes. That's always struck me as like not totally illegitimate. But the thing is, you know as you suggest Sally, I think for a lot of folks a sales tax is as much about kind of preserving Montana culture as it is about dollars and cents.

Mauk: People want to walk into a store and not have to calculate what something costs, right?

Saldin: That's right.

Mauk: Holly, beer drinkers in Montana have long wanted their favorite brewery to be able to stay open longer. Right now they have to close by eight o'clock, and Whitefish Democrat Dave Fern's bill would extend those hours to 10:00.

Michels: It did die in committee on a 16 to 3 vote, which means it's tabled for now. There could be an effort to bring it back. But for now it's on hold.

Supporters of the bill included breweries, obviously. They said the taprooms are really their connection to communities and that's where they raise awareness about their product, work to get it into distributors, places around the state. And it also generates income for them that helps them grow. And they argue they invest that money back into their communities, create jobs and opportunities, often in smaller towns that wouldn't have other economic opportunities. The co-owner of the brewery in Phillipsburg spoke and said that he's been able to employ about 17 people at his manufacturing operation there, and he gives a lot of credit from that growth to their taproom which has drawn a lot of people in.

Opposition came from the Montana Tavern Association and bar owners. They're arguing that breweries have been able to sort of increase what they're able to do in Montana since 1999 when they were first able to open taprooms; saying that they can do all these things that make them operate a lot like bars, but they don't have to put up the money for expensive licenses that bars need to operate.

Mauk: Here's how John Iverson of the Montana Tavern Association put it.

"The breweries that want to retail more beer want to have their cake and eat ours too."

Mauk: Kind of a pithy comment, but that's his point.

Michels: Yep, that's what Iverson was saying, along with others who opposed it, just that breweries continue to get a little bit more each session. There is some discussion that, you know, if you get breweries this time, expect them to come back in two years and ask to increase that 48 ounce limit on what they're able to serve.

Mauk: Well we'll follow whether that gets out of committee now that it's been tabled.

Rob, the same day Republican Congressman Greg Gianforte addressed the Legislature Bozeman Democrat Tom Woods introduced a bill to increase the punishment for assaulting a journalist from a $500 fine and six months in jail, to a $5,000 fine and a year in jail. He was making a point.

Saldin: Yeah. You know, I think clearly this was inspired by Gianforte's assault on the Guardian's Ben Jacobs the night before that 2017 special election. I think a lot of Republicans are going to see this as a very cynical and political move by Democrats to try to keep as much attention on that unflattering incident as they can. But there are a lot of other people who found that assault to be both totally shocking and as much more than just some quirky one off event.

I see it as part of a much broader and very disturbing problem of increasing hostility towards the press that manifests itself in a variety of alarming ways, up to and including physical violence. But also more broadly it's just an attack on the Democratic norms that underpin our society. Of course it also seems totally plausible that both narratives might be true, that Democrats and Woods in particular see this as both good politics and at the same time a principled effort to combat a serious problem.

Mauk: You've been listening to "Capitol Talk" our weekly legislative analysis program I'm Sally Mauk and I've been speaking with University of Montana Political Science Professor and Mansfield Center Fellow Rob Saldin and Lee Newspapers Capitol Reporter Holly Michels.