HELENA – On mostly party-line votes, the House endorsed two more bills Tuesday to cut taxes on businesses, the latest in a series of GOP-sponsored measures to reduce taxes.
On a 60-40 vote, the House gave preliminary approval to House Bill 523, by Rep. Nicholas Schwaderer, R-Superior, to reduce the state corporate income tax to 5.9 percent from the current 6.75 percent.
If it passes, it would reduce state revenues by $18.6 million over the next two years and $25.1 million in the next biennium.
The House voted 64-36 for HB408, by Rep. Mike Miller, R-Helmville, to reduce the rate of the property tax charged on pollution control equipment to 1 percent from the current 3 percent over two years. It would drop 0.5 percent annually.
This bill could cost the state $1.5 million in lost revenues over this biennium and $7.7 million over the next two years.
Both bills face a final House vote before moving to the Senate.
The bills’ sponsors said their bills would make Montana’s tax code more competitive.
However, Rep. Tom Jacobson, D-Great Falls, sounded the warning in opposing Schwaderer’s bill that the Legislature has failed to look at taxes holistically so far and opted instead for “a hodge-podge of tax policy.”
To date, he said, House and Senate committees have passed bills totaling $472 million in tax reductions. If they all pass, it would reduce the projected ending fund balance as of mid-2015 from a positive $469.5 million to a negative $245.4 million.
On his HB523, Schwaderer said Montana’s currently ranks 23rd best among the states for its corporate income tax rates.
“This would bring us up to the top ten,” he said.
Schwaderer disagreed with the cost estimate for his bill, calling it “a work in progress” and predicting it would raise more revenue.
“Investment is the driver of economic growth and the creation of jobs,” Rep. Brian Hoven, R-Great Falls, said.
Hoven called bill “a small step” and said he hopes that in six to 10 years, Montana can eliminate that tax.
Texas doesn’t charge a corporate income tax, he said, and has created more jobs in recent years than the rest of the states put together.
On the other bill, Miller said the 3 percent tax on pollution equipment was once one-fifth of the 15 percent tax on business equipment. Now that the business equipment tax is 3 percent or less in some cases, Miller said it’s time to reduce the property tax pollution control equipment to 1 percent to re-establish the historic ratio.
Miller said he also disagrees with the philosophy of taxing government-mandated pollution control equipment.
“This is a matter of fairness,” said Rep. Duane Ankney, R-Colstrip. “In a lot of cases, a lot of these pollution controls and other controls are laws that are coming like a blizzard out of the EPA (Environmental Protection Agency).”
While agreeing with Miller’s premise, Rep. Mary McNally, D-Billings, said she has another bill to move pollution control equipment into the same tax classification as business equipment to simplify the tax code.