KTVH.com

MT revenue director: GOP tax-cut bill initially drops state revenue

State Revenue Director Mike Kadas

HELENA – Republican proposals to slash federal taxes could end up cutting Montana tax revenue by as much as $30 million the next two years, state Revenue Director Mike Kadas says.

In a memo this week to Gov. Steve Bullock’s budget office, Kadas said the proposed changes in federal individual income taxes would lead to higher Montana tax revenue.

But other changes, such as increasing corporate tax write-offs and cutting federal mineral royalty payments, would more than offset those increases, he said.

“We have big concerns about the overall effects of what they’re doing,” Kadas told MTN News in an interview Wednesday. “They’re essentially financing tax breaks with deficit spending. …

“We’re not allowed to do that at the state level. At the federal level, it’s questionable whether you should do it. The only time you should do deficit spending is when you’re trying to combat a recession. That is certainly not the case (now).”

The U.S. Senate voted along party lines Wednesday to begin formal debate on the bill, 52-48, with Republicans in favor. A final vote on the bill could come later this week.

The GOP’s Senate bill cuts individual and corporate income-tax rates and makes other changes, such as eliminating some deductions for individuals but increasing deductions or write-offs that corporations can take, to lower their taxes.

The tax cuts are projected to increase the federal deficit by $1.5 trillion over the next decade.

Republican supporters are arguing the cuts will help juice the economy, by injecting more money into the private sector and encouraging businesses to invest and raise wages. Increased growth will help offset the projected revenue loss, they say.

Kadas, appointed by Democratic Gov. Steve Bullock, said he’s not seen any credible economist arguing that the tax cuts will lead to broad increases in economic growth.

The Kadas memo outlined several likely Montana impacts from the proposed GOP tax-cut bills:

Kadas told MTN News that his agency’s predictions are based on what they’ve seen of the House and Senate bills so far – but that much of what’s being developed has been shielded from public scrutiny.

“We’re still guessing to some degree at what the impacts are going to be,” he said. “Because we haven’t seen it in a bill. There have been no hearings. This whole process is kind of hidden from us.”