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Montana politics, elections and legislative news

Tax Cut Bills Advance In The House

Montana House chambers.
William Marcus

A permanent income tax cut and a two-year income tax rebate for homeowners edged closer to final approval in the Montana House Tuesday.

In floor debate Kalispell Republican Frank Garner pointed to the projected $300 million surplus in Governor Steve Bullock’s proposed budget, and said that money should go back to the people it came from, the taxpayers.

“I wish this was the first bill we actually looked at when we came into the house. I think it’s the first thing we should do. If we’re not going to do tax relief when we have a three or four hundred million dollar surplus, when are we gonna do it?”

The income tax cut reduces tax rates by one-tenth of a point across the board. For a taxpayer earning just $20,000 a year, it would mean as little as $8 a year in savings, while for the state, it would result in a revenue drop of $23 million a year.

But one representative, Roy Hollandsworth of Brady, predicted the tax cut would stimulate economic growth, and not reduce state revenue at all, and he was willing to put his money where his mouth is.

"I’ll bet you guys in the House a steak dinner when we come back that this bill did not cost us a dime. In fact we probably raise. So I’m gonna buy steaks for a hundred people if I’m wrong,” Hollandsworth promised.

Democratic House members generally weren’t interested in risking a drop in state revenue, even if they stood to win a steak dinner in the bargain. Bryce Bennett of Missoula said, with a 20 month gap between legislative sessions, the state needs a financial cushion in case of emergency.

“Montana doesn’t have a rainy day fund, so if there’s a big flood season or a fire season or a great recession, that’s what we use to get through," Bennett said. "That’s how we handle this state, and it’s because of our ending fund balance that we were able to get through the worst parts of the great recession."

Nancy Wilson, also from Missoula, said the tax cut would be small change for taxpayers, when it could do a lot of good for the state as a whole.

“Eight dollars in my pocket, or a group of people putting their eight dollars together…that’s what taxes are for. Let’s put our eight dollars together and build good infrastructure in this state that we are sorely lacking.”

Arguments that the state should save for a rainy day or put the money to good use lost out to the desire to put something back in taxpayers’ pockets. The tax cut was approved largely on a party line vote.

By a similar margin the house also approved a temporary tax credit. About 250,000 Montanans who own their homes would see their income taxes drop by $100 over the next two years. Both bills need one more vote before going to the Senate.

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