Montana Republicans Advance Tax Reduction Plans

By Beacon Staff

HELENA – Republicans moved forward Tuesday with tax cut plans that include asking voters in 2012 if they want a new tax credit tied to surpluses in state coffers.

The House endorsed the idea 67-33 in an initial vote. It also approved in a 70-30 vote a plan to reduce the business equipment tax on the first $2 million in equipment from 3 percent to 2 percent, and narrowly endorsed a move to get rid of a slew of tax credits in order to pay for the business tax cut.

Republicans who control both chambers of the Legislature are planning to put several referendums straight to the voters, including the new tax credit idea.

The measure would trigger the credit if state coffers exceed 125 percent of the prediction made in the preceding legislative budget plan. Half of the excess amount would be refunded to taxpayers the following year in the form of a credit on their state return, which would be dispersed according to a formula.

Minority Democrats argued the proposal is too complicated and is poor fiscal policy, since the state would never get to collect a surplus in good times that could be used during an economic downturn — as was done over the past several years.

Republicans argued it will force spending cuts.

“If government gets more money, it spends it, we spend it,” said Republican Majority Leader Tom Mcillvray. “The only way you are going to control spending is to let the taxpayers have some of it back.”

The separate business tax break has been a big goal for lawmakers. Gov. Brian Schweitzer has opposed their plan, in favor of his proposal to eliminate the tax altogether for businesses with less than $1 million in equipment. He argues it will be more helpful for the small business to eliminate it, rather than reduce it for businesses large and small.

Democrats, and some Republicans, also lashed out against a companion bill to the tax cut that would pay for it by eliminating $14 million in tax credits. Gone would be credits that give a break to individuals for making energy efficiency upgrades and to filmmakers shooting in Montana, which Republicans argue are useless.

The opponents, on the losing side of a 51-47 initial vote, argued the tax credit for homeowners who upgrade windows and doors and such to save energy is useful to a lot of people.

“This is one of the biggest deductions that everyday people can take,” said Rep. Duane Ankney, R-Colstrip. “Realize that you are taking something away from the everyday working man and working woman in Montana when you take that tax credit away.”

All three measures face one more final vote in the House and final negotiations with the Senate over some changes.

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