2013 MT Legislature

Feb 22, 2013 1:07 PM by Marnee Banks (Helena)

MT lawmakers debate simplifying the state tax code

Montana's tax code is complicated and in need of an overhaul, according to MT State Senator Bruce Tutvedt (R-Kalispell).

Tutvedt is carrying a bill aimed at reforming Montana's tax code; he told fellow legislators on Thursday, "I am excited to bring you this bill. It's a quantum leap I think. It's what the feds need to do, simplify the income tax and lower it."

Right now, on average, Montanans pay a 6.9% tax rate on their individual income tax returns.

Tutvedt's bill would lower the rate to 5.9%, and for those making less than $15,000 per year the rate drops to 4%.

Supporters of the bill say it will make the Montana tax code one of the simplest in the nation.

George Olsen of the Montana Society of CPAs said, "The current Montana individual income Form 2 tax booklet includes 43 pages of instructions. And that 43 pages of instructions is on top of the 214 pages of instructions that come with the federal return."

However, the legislation gets rid of several tax credits to offset some of the money that is lost by lowering the tax rate, including the Contractors Gross Receipts Tax Credit and the Energy Conservation Tax Credit.

So groups like the environmental community who benefit from them have voiced their opposition the bill.

Kyla Maki of the Montana Environmental Information Center said, "I can certainly appreciate the value of simplifying the tax code and the value of reducing the personal income tax rate. But the value of these two particular tax credits is very important to a large number of individuals across the state."

The other big component of the bill lowers the capital gains tax by nearly 2%.

The bill does come with a pricetag; according to the Montana Department of Revenue the bill would cause the state to lose $4.4 million in revenue during the current budget cycle.

Tutvedt says the bill benefits the low income and those with investments.

And for those taxpayers who benefit from the tax credits, Tutvedt says the lower rate will make up for it.

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