Good Analysis on Business Equipment Tax Bills

March 26, 2009 in 2009 Legislative Session, Economy & Business

by jhwygirl

Over at Session 61, Executive Director Bob Decker of The Policy Institute has a great analysis on the 4 bills, in various status, working through the legislative session.

Rep. Jill Cohenour has HB649 which has good and bad. Session 61 doesn’t like the “one step forward and one step backward” of the bill, and I don’t blame him.

Frankly, I wonder why we have to have a law – a law – to go after tax cheats and scofflaws. Isn’t that a bit crazy? Unfair? Seriously – what goes on in the mind of a legislator that votes against efforts to go after people who aren’t paying their taxes?

It was attempted last legislative session as I recall – probably before that too – and failed.

You hear quite a bit from certain members regarding Montana’s monstrously evil business equipment tax. Really? Decker explains:

Montana’s tax rate on business equipment, i.e., the percentage of the appraised market value of the equipment that is paid annually as tax, has been reduced several times in the past 20 years:
– In 1989, the Legislature consolidated the various equipment tax rates at the time, which varied from 11% to 16%, into one rate of 9;
– In 1995, the Legislature reduced the rate from 9% to 6%;
– In 1999, the Legislature reduced the rate from 6% to 3%, and it also established a tax exemption for business equipment valued at $5,000 or less;
– In 2005, the Legislature increased the exemption from $5,000 to $20,000.

Summing up his analysis of the bills, Decker says “At this point, the question is: How much more does Montana’s Legislature have to lower taxes on the business community? The state currently ranks high as a favorable place to do business, and further reductions in that sector’s tax responsibility simply mean that other Montana taxpayers – homeowners and individual income tax payers – take on the burden. “

Which sounds much nicer than the public comment he offered during testimony for HB395:

During the question-and-answer part of the hearing, Rep. Dick Barrett, D-Missoula, and a retired economics professor, asked one witness:

“If we pursue the logic of the argument that reducing taxes rates increases tax revenues, don’t we maximize tax revenues when we make the tax rate zero?” Barrett asked, tongue-in-cheek.

Replied Decker: “That’s where the logic leads.”

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