Are We Fueling the Rich or Boosting the Economy? Find Out Now!
Are you making less than $26,700? If so, you could pocket an extra $39 from the income tax cut pitched by Governor Greg Gianforte. On the flip side, if you’re bringing in a whopping $749,001, get ready to see a hefty boost of around $9,577 heading your way!
Earlier this month, the Governor’s Office rolled out what they’re calling “the largest income tax cut in state history.” This proposal aims to slash the income tax rate for most Montanans from 5.9% down to 4.9%. Talk about a game changer!
But there’s more — the proposal also looks to enhance the earned income tax credit, ensuring that lower- and middle-income earners get a little extra love in their wallets.
“All these changes together will deliver a staggering $850 million in permanent income tax relief to hardworking Montanans,” stated the Governor’s Office. That’s a lot of relief in times of economic uncertainty!
Now, the Montana Legislature is gearing up to dissect this budget in their 2025 session, and the numbers are already stirring up some debate.
In a recent press conference, Rep. Mary Caferro from Helena fired back, suggesting the cuts are skewed — with a whopping 75% of the benefits going to just 20% of Montanans. She argues that for many middle-class families, the savings translate to merely “two tanks of gas,” hardly a significant boost.
On the other side of the aisle, Sen. Greg Hertz, the chair of Senate Taxation, contends that states without income taxes attract more businesses. He highlights that the tax burden is already imbalanced in Montana, stating, “The bottom 50% of earners pay only 6% of all income taxes, while the top 10% shoulders a hefty 58%.” That’s some serious inequality!
According to an analysis, the proposed rate cut could cost the state around $255 million a year, which is about 25 times higher than the expansion of the earned income tax credit.
The analysis points out that households earning more than $749,000 would benefit by nearly $10,000, while families making between $30,000 and $85,000 would see a meager cut of just $40 to $115.
“The tax code as it stands has favored affluent individuals, while those on lower incomes end up paying a larger percentage of their earnings in taxes,” said the analysis. It warns that this budget proposal could worsen these disparities, costing the state hundreds of millions in revenue.
Yet, the Governor’s Office insists that every Montanan stands to gain from this plan. “Our proposal includes $850 million in permanent tax relief for hardworking Montanans — a groundbreaking tax cut benefitting everyone,” spokesperson Kaitlin Price asserted.
Hertz maintains that low-income earners contribute little to the state’s tax revenue, highlighting recent legislation that lifted around 100,000 low-income Montanans off the tax rolls. “Single earners won’t owe taxes on the first $15,000 of income, and couples on the first $30,000,” he explained.
In essence, while Hertz supports a tax reduction, he stresses the importance of ensuring it doesn’t jeopardize state services. “We need a balanced approach to maintain the necessary revenue for public services,” he remarked.
Heather O’Loughlin from the Montana Budget and Policy Center expressed concerns about the governor’s track record of slashing income taxes. “This could lead to a significant revenue cut that disproportionately favors the wealthy,” she warned, raising flags about the potential impact on future budget investments.
At the press conference, Caferro voiced her worries about these cuts’ sustainability in light of the state’s ongoing needs. “This upcoming proposal is unprecedented, and we have pressing matters in our budget that require attention,” she cautioned.
Income tax report
