HELENA – The Republican-controlled Senate Taxation Committee on Tuesday rejected three Democratic bills aimed at helping low- and moderate-income Montanans.
The bills sought to give a one-time tax credit to renters, provide a state earned income tax credit to the working poor and replace other property tax assistance programs with a property tax circuit-breaker bill to help low- and middle-income homeowners and renters.
All three bills failed on 7-5 votes and were then tabled. Democrats voted for the bills, while Republicans opposed them.
Democrats contended that Republicans are willing to approve tax breaks for corporations and higher-income people, while denying them to low- and middle-income people.
“There seems to be a bias that we’re willing to give away money to people at upper-income levels,” Sen. Christine Kaufmann, D-Helena, said later. “There’s a judgment that that’s good tax policy.
“But when we want to provide assistance to people at the lower incomes, that’s judged to be bad tax policy. It’s my belief that providing assistance to low-income people has a better stimulatory effort on the economy because they spend it on goods and services locally.”
In response, Senate Taxation Chairman Bruce Tutvedt, R-Kalispell, said later it is the committee’s duty to figure out the merits of what’s proposed in the bills before the panel.
“I’m a jobs Republican, and I like tax relief that supports a stronger economy and a flat, fair tax system,” Tutvedt said.
Here’s a look at the bills:
• Senate Bill 378, by Kaufmann, to provide a state earned income tax credit to the working poor equal to 20 percent of the federal credit. It was estimated to reduce general fund revenue by $37 million in 2014, with the reduction increasing in future years.
“I think it’s important for us to have a tax credit for those at the bottom of the scale,” Kaufmann told the committee.
Sen. Fred Thomas, R-Stevensville, said state and federal public assistance already is “pretty gigantic.”
“This legislation is kind of throwing money out there and saying it’s needed and necessary,” said Thomas. “I could do that, too. I’ve got medical bills to pay.”
He added. “We’re just going to add more things because it makes us feel good. In this case, we’re just throwing it out.”
At that point, Kaufmann lowered her head on the desk in disbelief and later called Thomas’ comments “rude and inappropriate.”
“The capital gains tax credit is just throwing money out there, too,” she said. “It is also public assistance.”
Thomas apologized for his comments.
• SB318 by Sen. Kendall Van Dyk, D-Billings, to provide a one-time tax credit of up to $250 per household for renters. It would cost an estimated $12.1 million.
Sen. Dick Barrett, D-Missoula, said the tax credit for renters mirrors Gov. Steve Bullock’s proposed one-time, $400-per-household tax rebate for Montana homeowners.
“I think it is very likely at some point down the line we will be looking at one-time-only tax relief,” Barrett said. “This is the appropriate way of reducing an unwarrantedly high ending fund balance.”
Tutvedt replied, “I’m not a fan of one-time-only tax cuts.” He said he’ll likely vote against them regardless of whether they come from Democrats or Republicans.
• SB309, by Barrett, to replace current property tax assistance programs with a circuit-breaker bill. It would reduce state revenues by about $15 million a year.
He urged the committee to keep the bill alive to give lawmakers many choices toward the end of the session.
Sen. Ron Arthun, R-Wilsall, predicted “this thing would fly” if the costs could be lowered to closer to revenue neutral.
Barrett said a lot of the costs are driven by renters.