Gianforte launches a reduction in the tax on commercial equipment

A bill implemented the push of the Republican Governor Greg Gianforte to further reduce the tax on trade equipment of Montana saw its initial audience on Thursday, attracting the support of commercial and agricultural groups.

The proposal, Senate bill 322would increase an exemption threshold of $ 1 million existing at $ 3 million. This means that companies with less than $ 3 million in equipment such as tractors or industrial machines would be fully excused to pay taxes on their equipment and companies with more goods would be exempt from tax for the $ 3 million in their assets.

“Trade equipment tax obliges companies, including family farms and ranchs, to take resources that they would have used to invest in their operations and create jobs, to pay an annual tax on all their equipment and machines they need to work,” Gianforte said at a press conference on March 20.

The corporate equipment tax is structured as a property tax, which means that the equipment is introduced into the same tax system that is used for houses and commercial buildings, most collections that are funding local services such as schools and police.

The equipment tax has however been reduced several times in recent decades, legislatures during democratic administrations and republican governors reducing the effective tax rate and increases the exemption threshold.

A bill signed by Democratic Governor Steve Bullock in 2013, for example, increased the exemption threshold to $ 100,000. According to A report of the timeThis change was exempt between 10,000 and 11,000 of the 17,000 companies then subject to equipment tax. Gianforte has signed new exemption increases on each of the last two legislative sessions of the State, increasing the threshold $ 300,000 in 2021 And $ 1 million in 2023.

While corporate equipment represented approximately 13% of the state’s land tax base in 1996, According to archive figures from the Montana Ministry of RevenueIt has been reduced to 4.8% in 2023. (During this same period, the residential share of the tax base increased from 35% to 58%).

When you praise the increase in the 2023 threshold, the Gianforte office said that it exempt 5,000 additional companies from the equipment tax. He says that this year’s proposal would free 700 additional companies.

A budgetary analysis From the tax bill for this year’s equipment developed by the Governor’s Budget Office indicates that it would reduce the part of the tax base at the state level by around 9%. The bill would use state dollars to fill the collections of blows and county which result at a cost of approximately $ 5.6 million per year, but it will not compensate for the difference for school taxes. Consequently, the analysis believes that the measure would push certain school taxes on houses and other unquined goods, producing an average increase estimated at 0.35%.

SB 322 sponsor Senator Josh Kassmier, R-Fort BentonThe hearing of the bill on Thursday law before the senatorial tax committee that the tax on corporate equipment is unduly heavy for farmers since agricultural equipment now generally generally generally costs a million dollars for a combination. “It’s a kind of annual sales tax,” said Kassmier.

The other supporters who testified during the hearing included the director of the Revenue Department, Brendan Beatty, who appeared on behalf of the Governor’s office, as well as the Montana Grain Growers Association, the Montana Taxpayers Association, the Montana Stockgrowers Association and the Montana Chamber of Commerce.

An opponent, Rose Bender at the Montana Budget and Policy Center, argued that the bill was not fair for the owners given how their tax bills increased compared to the taxes on corporate equipment during the last quarter of a century.

“The vast majority of companies are already exempt from corporate equipment tax – and this bill is used to provide another tax reduction for large companies at a cost for state and local land taxpayers,” said Bender.

Gianforte, for its part, argued during the press conference on March 20 that the equipment tax is bad for companies in part because the tax is due, that the equipment is currently in profitable use. He also said that the inventory task of the equipment to calculate their tax bill was an excessive administrative burden for many companies.

“It’s really, really bad,” he said.

Gianforte said, however, that he does not plan to completely eliminate the tax, instead of climbing the exemption threshold to the point where remaining taxpayers are larger companies such as the main industrial operations.

“The objective is to withdraw all small businesses from this tax,” he said.