Governor Greg Gianforte, together with national anti-tax advocate Grover Norquist, promoted a proposal to cut Montana’s primary income tax bracket from 5.9% to 4.9%. The Republican governor also suggested reducing homeowner property taxes by increasing taxes on second homes and reiterated his opposition to a statewide sales tax, likening it to a “tapeworm.” “We’ve put forward a historic proposal. We look forward to working with the Legislature to get it done,” Gianforte stated.
For years, Gianforte has argued that lowering the top-bracket rate, currently affecting incomes over $20,500, would enhance Montana’s economic competitiveness, especially when entrepreneurs decide where to establish their businesses. Montana’s top-bracket tax is higher than many northern Rocky states, and unlike its neighbors, the state doesn’t use a statewide sales tax for public services.
Since taking office in 2021, Gianforte and the GOP-led Legislature have lowered income tax rates, reducing brackets from seven to two and cutting the top-bracket rate from 6.9%. However, Democrats criticize these measures as favors for the wealthy. Gianforte’s budget proposal, according to fiscal analysts, could reduce state tax collections by $350 million annually. To aid lower-income families, he suggests expanding the state match of the federal Earned Income Tax Credit, offering $20 million yearly savings to taxpayers.
Democrats and some Republicans have sharply criticized Gianforte’s current tax reduction plans. House Minority Leader Katie Sullivan commented, “The Governor’s income tax proposal was designed by — and benefits— the Governor’s ultra wealthy friends, not everyday Montanans.” Alternatively, some legislative Republicans suggest raising the threshold for the top tax bracket to provide relief to middle-income taxpayers.
House Bill 337, sponsored by Speaker of the House Brandon Ler, R-Savage, proposes taxpayers pay the lower-bracket rate on their first $70,000. Senate Bill 203, backed by Senate President Matt Regier, R-Kalispell, suggests raising it to $100,000. This bill has seen support from several Senate Democrats. Regier believes starting with middle-class tax cuts makes sense. “Let’s do middle class first,” he stated.
House Democrats reference a December fiscal analysis that questions the state’s long-term financial health under Gianforte’s tax plan, noting potential risks to budget stability. Analysts suggest economic downturns or federal funding cuts, influenced by the Trump administration, could add uncertainty, with federal dollars comprising half of the state’s budget.
Gianforte defended potential tax cuts, crediting his administration’s financial management. “We have passed very conservative budgets over the last four years, significantly less than the growth of inflation. And guess what? We have surpluses both structural and one-time. This has allowed us to put forward proposals to further reduce the tax burden,” he said.
Norquist, known for his low-tax advocacy, supports a “flat tax” system, noting it’s harder for lawmakers to raise taxes under such a system, which may appeal to investors considering Montana. He also favors property tax constraints like California’s Proposition 13. Gianforte opposes measures that use income tax revenue to reduce property taxes, arguing it incentivizes local government overspending.
Democrats have proposed property tax relief via House Bill 154, which has bipartisan backing. Gianforte’s preferred measure, House Bill 231, was pending an initial vote. In alignment, Gianforte reiterated his opposition to a statewide sales tax, stating: “Montanans have spoken. They don’t want a sales tax.” He emphasized efficiency in government to lower both property and income tax burdens.
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