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Tax cut proposals debated in Mont. House committee

Matt Gouras, Associated Press

HELENA, Mont. (AP) -- Backers of Montana's governor's proposed $400-per-homeowner tax rebate squared off Friday against Republicans who want to cut property tax rates during a committee hearing looking at both plans.

Gov. Steve Bullock is proposing a rebate, stemming from a campaign promise, that he argues will go straight into the pockets of average Montanans and into the economy. Republicans are proposing a reduction in the property tax rate, through a reduction in the statewide "mills."

Both plans would cost the state about $100 million this two-year budget period.

The Democrat's deputy chief of staff, Ali Bovingdon, criticized the Republican proposal for only giving the average homeowner a $44 tax cut, while giving multimillion dollar cuts to large corporations.

"Gov. Bullock believes that any tax proposal being considered by this body should not skew toward large corporations, but it should benefit our neighbors and friends," Bovingdon said. "This is about putting money into the wallets of hard working Montanans."

Backers of the governor's plan noted that such a rebate was previously done under Govs. Brian Schweitzer and Marc Racicot.

But state Rep. Scott Reichner, the sponsor of the GOP plan, called Bullock's one-time rebate a trick. The Bigfork Republican said the GOP plan promises lasting property tax relief.

"The citizens of Montana have been down this road already. If you travel around the state, you understand they didn't want a one-time gimmick. They want permanent property tax relief across the board for everybody," Reichner said.

Reichner argued the Republican plan is fair because it cuts the property tax rate for everyone: Those who pay more get a bigger cut.

No immediate vote was taken on the proposals.

Bullock's proposal likely faces a tough path in the Republican-led House.

On Friday, that panel tabled Bullock's plan to reduce the business equipment tax by increasing the threshold on businesses exempt. Under the proposal, businesses with less than $100,000 in equipment would not pay the tax, up from the current threshold of $20,000.

GOP critics said the threshold is not fair because businesses with equipment just over the threshold, say $101,000, have to pay the tax on all their equipment — providing a disincentive to investing in new equipment.

Business equipment is currently taxed at 1.5 percent on the first $3 million in equipment. The rate goes up to 3 percent above that.

The House Taxation Committee is likely to look more favorably on a different proposal it reviewed Friday, carried by a Republican and drafted by the Montana Chamber of Commerce.

That measure would employ an exemption on the first portion of business equipment, instead of a threshold.

House Bill 472 says the first $250,000 in equipment would not be taxed. It differs from the governor's proposed threshold because businesses that just go over the exemption, such as $251,000, would only have to pay the tax on the $1,000 of equipment above the exemption.

Supporters said the "punitive tax" thwarts business expansion. Democratic critics said they preferred Bullock's proposal that focused all of the benefit on smaller businesses.

No immediate action was taken on that proposal, which would cost state coffers about $12 million a year.

The Senate is backing another GOP plan to reduce the business equipment tax. It would reduce the tax rate on the first $10 million of property.