Candidate says tax package is revenue neutral
HELENA - Democratic gubernatorial candidate Mark O'Keefe on Thursday proposed giving property tax relief to homeowners and small businesses and allowing local residents to vote to impose their own taxes, excluding a sales tax.
O'Keefe said his package contained six initiatives intended to ease the tax burden on Montanans and make taxes simpler and fairer for working families.
"From providing homeowner relief to the families and seniors who need it to reiterating our promise to veto a general retail sales tax, our package will help Montana's working families," O'Keefe said.
O'Keefe said his tax package is revenue neutral, meaning it won't cost any more revenue than is now collected.
If elected governor, O'Keefe said he would propose:
€ Reducing property taxes for homeowners. He proposed giving homeowners a $30,000 exemption on their homes' property values and small businesses a $20,000 exemption, which would lower the value on which their property taxes are computed. He wants to repeal the current system that provides a percentage reduction as an exemption. His plan would remove 20 percent, or 20,000 residential properties, from tax rolls and 23 percent of commercial properties.
€ Freezing the business equipment property tax rate at 3 percent. The 1999 Legislature lowered the rate from 6 percent to 3 percent and provided it can be phased out by 1 percentage point a year if the growth of state wages and income exceeds a set percentage. O'Keefe disagreed, saying 3 percent is competitive with other states and he opposes eliminating the tax.
"It would further shift the property tax burden to residential property and small business owners," he said.
He said the cost to reimburse local governments for lost revenue from the business-equipment tax cut will be at least $65 million a year in the 2002-03 biennium and $130 million if the tax is eliminated.
O'Keefe did propose exempting the first $25,000 of market value of agricultural equipment to help struggling farmers and ranchers.
€ Allowing local governments to put local-option taxes on the ballot. These taxes, subject to voter approval, would allow cities and counties to have the resources to solve local problems, he said. O'Keefe would prohibit them from putting a general sales tax on the ballot.
€ Renewing the planned gift endowment credit. He said this program is working well and should be renewed because the university system and nonprofit groups are making good use of it. Under the program, Montanans may make small or large donations to qualifying groups and get a tax credit, which is a dollar for dollar reduction of taxes by the amount of the endowment, as well as a tax exemption, which lowers taxable income.
€ Vetoing a retail sales tax if legislators approve one. He has said a sales tax puts working families at an even greater disadvantage because they pay more than their fair share. In addition, as people and businesses buy more products over the Internet, a sales tax places local merchants at a disadvantage.
€ Simplifying the state's income-tax system and lowering the top marginal rate of 11 percent. As he said earlier in the campaign, Montana has the second highest marginal tax rate in the country, which is an impediment to attracting entrepreneurs to the state.
His plan would use federal taxable income as the base and reduce the marginal rates from the current levels of 2 percent to 11 percent to 4 percent to 7 percent. This figure would be applied to the federal taxable income to determine what people owe in state taxes and would drop the 33,000 lowest-income taxpayers from the tax rolls. Most taxpayers would pay about the same in taxes, while those making more than $200,000 annually would pay slightly more.