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MT Dems proposing bigger tax cuts for low-income homeowners

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Posted at 5:11 PM, Jan 21, 2021
and last updated 2021-01-21 20:42:48-05

HELENA — While Republican Gov. Greg Gianforte has made tax cuts a centerpiece of his overall state budget, minority Democrats at the Legislature are drawing up their own tax-cut plans – including a bigger proposed break for property taxpayers.

“Every one of us legislators, that knocks on doors, the one thing we hear about over and over again is property-tax relief,” said Senate Minority Leader Jill Cohenour, D-East Helena. “In the high-growth areas, we have folks who have low incomes that are being priced out of their homes.”

On Thursday, Cohenour presented her bill containing considerable property-tax relief, through a state income-tax credit for lower- and moderate-income homeowners and renters.

Senate Bill 10, the product of a bipartisan interim legislative committee, would benefit about 50,000 Montanans, she said, with an average annual credit of $979 for homeowners and $466 for renters.

However, Cohenour told the Senate Taxation Committee that she wants to amend the bill to preserve some existing property tax-break programs, and that the changes may somewhat alter the precise impacts on various taxpayers.

Later Thursday, minority Democrats unveiled several other tax proposals they plan to introduce at the 2021 Montana Legislature: An expansion of the earned-income tax credit, which benefited 70,000 low-income Montana families in 2019, and an exemption of some Social Security income from state income taxes.

However, they also said they want to raise the state’s top marginal income-tax rate to finance their cuts – a proposal sure to be rejected by Republicans, who control the Legislature and the governor’s office.

Gianforte’s lead tax-cut proposal is to lower the top state income-tax rate, from 6.9 percent to 6.75 percent, saving taxpayers about $28 million a year, once fully implemented.

An MTN analysis showed that most of the benefits of the cut would flow to higher-income taxpayers, who pay a larger share of income tax revenue.

Gianforte’s proposed budget also includes about $3 million a year in reductions for property taxpayers. His administration hasn’t released the details of that cut, but has said it will be focused on lower-income households.

Cohenour’s property-tax bill has about the same cost to the state treasury as Gianforte’s proposed income-tax cut.

She told MTN News in an interview that she’s hoping to convince the Republican governor that more cuts should be aimed at lower-income households’ property-tax burden, rather than cutting income taxes for wealthier households.

“Gov. Gianforte has said a million times that good ideas can come from anywhere,” she said. “Why would we not want to put a more meaningful tax relief to the lowest- and moderate-income folks in this state? I think it’s a much better way to spend that money.”

The Senate Taxation Committee took no action on Cohenour’s bill Thursday.