Montana Democrats this week unveiled their proposals to reduce Montanans' tax burdens, including a property tax relief bill — something that's also a priority of Republican Gov. Greg Gianforte.
Democrats, who are a minority in the Legislature, said Thursday that while their proposals don't mesh with Gianforte's, they're hoping the majority party that has run on reducing taxes and boosting the state's economy will give their legislation a fair shake.
"We've said from the beginning of the session that we're here to put good policy ideas out and to work hard to gain support for them," said House Minority Leader Kim Abbott, a Democrat from Helena. "And that's what we're planning on doing ... It does contradict the governor's plan in both who benefits and how it's paid for."
The bills in the Democrats' package include one carried by Sen. Jill Cohenour, who is the minority leader in the Senate and from East Helena. It came out of the bipartisan interim committee process and aims to provide credit to offset property taxes for both homeowners and renters.
"This is really targeted to help those most in need," Cohenour said, adding that she believes money saved would circulate back into the local economy.
The bill would give renters a tax credit of about $466 and homeowners $979, and would cover about 50,000 people in the state, targeting the low- and middle-income brackets.
Cohenour said about half of the states have a similar "circuit-breaker" property tax program targeting these populations. She told the Senate Taxation Committee on Thursday that the state's lowest-income families pay more of their income in property taxes than the wealthiest.
Gianforte said in a press conference Friday said he had met with minority leadership and his budget director had longer meetings with them about the proposals.
"We'll take good ideas wherever they come from," Gianforte said. "We need across-the-board tax relief, particularly as it relates to property taxes. Our goal is to help lower-income folks who are at risk of losing their home due to an increase in property taxes and we included that in our budget."
Gianforte's budget has an additional $3 million a year, or an increase of 25%, for funding the program that helps seniors and disabled veterans offset increasing property taxes.
Rep. Emma Kerr-Carpenter, D-Billings, is carrying a bill to expand the earned-income tax credit to 10% of the federal level. And Rep. David Fern, D-Whitefish, has a proposal to reduce the tax liability on Social Security incomes below about $46,000 annually.
In the 2019 session, a Republican bill to eliminate taxes on Social Security income at all levels was vetoed by the then-Democratic governor because it would have reduced revenues too much. A memorandum from the Department of Revenue estimates Fern's bill would be an $11.7 million hit to the state's revenue stream in the 2023 fiscal year.
Republican Rep. Paul Fielder, of Thompson Falls, has a bill this session that would eliminate the tax for all Social Security income. In the 2023 fiscal year, a note attached to the bill estimates it would reduce the state's general fund revenue by $91.3 million. That number grows to $101 million by 2025.
Abbott said that the Democrats' package would result in reducing the state's revenue by about $50 million overall. The party would offset that by attempting to reinstate the top income tax bracket to the 2003 level of 8.9%; that would be on incomes of more than $500,000 a year.
"Right now you have a gas station attendant or retail worker who's working 9-to-5 at minimum wage and paying the same top tax rate as our governor and other millionaires. We don't think it's right, and we know Montanans don't either," Abbott said.
The proposal is opposite to one included in Gianforte's budget, which will cut the top marginal individual income tax rate from 6.9% to 6.75%, which Gianforte said would affect half the state's taxpaying residents. The taxable income threshold for people in that tax bracket is $18,400. Taxable income is the part of a person's income that is taxable after any allowable deductions from their gross wages.
Analysis has shows the $30 million in tax savings will benefit the highest earners most.
"We think that our package is different from the governor's package because of who benefits from it," Abbott said. "The governor's tax cut, although we haven't seen a lot of details, includes a $30 million giveaway to Montana's wealthiest folks, the people that don't need it. Ours is $50 million targeted at the folks that do need it. So in terms of how it works with the governors' budget, I'm not sure it does."
Gianforte on Friday said his proposal is meant to make Montana a more attractive place to live.
"Our approach ... is to provide relief on the broadest basis as possible," Gianforte said. "Montana has one of the highest personal income taxes in the West, and that discourages investment here. We just need to make Montana more competitive. We're going to do that by lowering taxes for everyone. Our (income tax reduction) proposal would affect anyone in Montana that has taxable income above $18,500 per year, so that's that's an awful lot of folks."
At the start of the Democrats' press conference Thursday, Abbott drew contrast between the bills Democrats were introducing and the Republican-carried bills that have dominated the news this week and would do things like make transgender athletes participating in sports based on the gender they were assigned at birth and limit a woman's ability to access abortions.
"It's incredibly disappointing that despite insisting that their priorities are about jobs and the economy, Republicans have a have spent this entire week attacking the rights and freedoms of Montana families and women," Abbott said.