Legislature Considers Bill To Reduce Income Tax Rate

For more than two hours Thursday, lawmakers heard testimony from 20 proponents and 18 opponents on Senate Bill 159, which would slash the top income tax rate from 6.9 percent to 6.75 percent.

The bill’s supporters said it would help bring the state more in line with other western states with lower income tax rates, incentivizing business to move to Montana.

Montana has the second highest income tax rate among its neighbors. However, it is also the only state in the region without a sales tax.

Gov. Greg Gianforte’s budget director Kurt Alme said lowering Montana’s income tax would position the state well as it comes out of the pandemic.

“This is the perfect time for us to begin our move to move our top rate down to get competitive with the neighbors in the south,” Alme said.

Donna Arduin is the president of Arduin, Laffer and Moore Econometrics, a Florida-based business consulting firm. She said lowering Montana’s top tax bracket would help the state reach its “economic potential.”

The tax cut would cost the state about $30 million every year, a deficit Gianforte has said he would like to meet by streamlining government agencies and taking advantage of future recreational marijuana tax revenue.

Heather O’Loughlin spoke on behalf of the Montana Budget and Policy Center, which opposes the bill. She said making such a large cut is reckless. She pointed to Colorado as an example, which she said relies too heavily on recreational marijana and sales tax revenue to offset its low income tax rate.

Jon Ellingson spoke in opposition to the bill for Big Sky 55+, a nonprofit which advocated for Montana seniors. He talked about the ramifications such a large deficit in the state budget could have.

“Mark my words,” Ellingson said, “If this [bill] passes, you will create a revenue crisis and shortfall, and the budget will be balanced not by repealing this legislation, but by decreasing support for those of us who need it the most.”

Other opponents said the bill represents a handout to the richest Montanans with little benefit for middle and working class Montanans.

“This really is an insult to average workers trying to make an honest living and providing tax cuts for the wealthy does not help people like me,” said Rachelle Sartori, who lives in Helena.

If the bill passes, Montanans earning $60,000 or less would save $50 or less each year, while those making $2 million per year would save about $3,000.