Bill seeks tax hike for wealthy, a cut for others

Associated Press

HELENA — A Helena Democrat is waging a longshot bid to persuade the Republican-led Legislature to accept a tax hike for those earning more than $150,000 in taxable income.

The proposal from state Sen. Christine Kaufmann would reduce state income taxes for wage earners below roughly $31,000 in actual income, while those in-between would pay the same state income tax rate.

Kaufmann told the Senate Taxation Committee on Wednesday that her plan for “more progressive” tax rates needs to be part of the broad discussion on taxes this session.

Republicans have advanced bills to cut business equipment taxes, reduce income taxes and to cut property taxes. Democrats argue the benefits of those proposals will mostly go to the wealthy.

Democratic Gov. Steve Bullock has proposed a $400 per-homeowner rebate, which GOP critics argue fails to provide permanent relief. The governor is backing a business equipment tax cut that targets smaller businesses, which Republicans don’t like because it doesn’t really help larger companies.

Supporters of Kaufman’s proposal, Senate Bill 379, argued lower-income residents need a tax break more than higher-income earners.

“Do I think by bringing this bill forward I would win enough votes for it? No,” Kaufmann said after a hearing. “I think it is important to bring bills forward that push the edge a little bit.”

The veteran Democrat said she thinks introducing the idea could pave the way for such a concept to be included later in other legislation.

But opponents, such as the Montana Chamber of Commerce, called the proposal “wealth redistribution” that would set back economic development efforts.

Kaufmann’s proposal would set a new top tax rate of 8.9 percent on taxable income above $250,000 and 7.9 percent on income above $150,000. That is an increase from the current top rate of 6.9 percent paid on taxable income above $13,900, which can equate to roughly double that in actual earned income.

The Department of Revenue said most Montanans now pay that top rate because the threshold is so low. Kaufmann’s bill would reduce several rates for the lower thresholds that charge from 1 percent to 6 percent on taxable income.

Republican Sen. Bruce Tutvedt, of Kalispell, chairman of the taxation committee, said a tax hike on higher income earners has zero chance of getting GOP support.

He said Republicans are excited about their plans in several bills to reduce income tax rates for everyone, while also reducing the number of tax brackets. They are seeking a flatter tax with fewer credits.

The taxation panel is expected on Friday to approve on one of the plans, Senate Bill 282, brought by Tutvedt, which would set just two rates: 4 percent and 5.9 percent.