The Senate on Tuesday gave preliminary approval to three of Gov. Greg Gianforte’s flagship tax reduction proposals, leaving one last vote in the upper chamber before the bills move to the House.
Two of the bills slice the top income tax rate in Montana. Senate Bill 159 would reduce taxes on income above $17,400 from 6.9% to 6.75%, working out to around $30 million a year, while Senate Bill 182 would decrease that top rate in tiers based on a series of revenue triggers. Under the latter bill, some excess money from the budget stabilization fund (or “rainy day” fund), the fire suppression fund and the capital development fund (which helps finance infrastructure projects) would be set aside to pay for the cuts, albeit only on a one-time basis.
SB 159 passed on a 34-16 vote, while SB 182 passed 31 to 19. Gianforte’s third tax plan, SB184, eliminates the capital gains tax on income from the sale of employee-held stock in companies that meet certain Montana residency requirements.
Gianforte and his Republican allies in the Legislature say the tax cuts are necessary to attract businesses and jobs to the state, a type of trickle-down logic that opponents have attacked as antiquated, easily disproven and fiscally irresponsible.
More than half of Montanans would see a decrease in their income tax liability under SB 159, but, as Democrats pointed out on the floor Tuesday, low and middle-income Montanans would see only marginal cuts.
A resident earning $34,000 a year would see only a $12 difference, while those earning $1 million would earn back $1,400, said Sen. Edie McClafferty, D-Helena.
“There’s a disagreement on the philosophy here of where we’re going,” said Sen. Greg Hertz, R-Polson, who is carrying the two income tax bills for the governor. Out of these proposals, Hertz said, the average Montanan “gains the opportunity to get a better paying job.”
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