Jacob Owens, Mar. 20, 2024 - NBC Montana
HELENA, Mont. — Tax season is in full swing, and the Montana Budget and Policy Center is out with a new report that says taxes have shifted away from Montana’s wealthiest residents and onto everyday people.
Residents have recently seen their property taxes increase and wonder why that is, Rose Bender, the center's director of research, said.
“It’s a bigger piece of how, over the last few decades, Montana has cut income taxes for the wealthy, while shifting property taxes onto residential homeowners and renters,” Bender said.
The nonprofit’s report found Montana families with the lowest 20% of income are using 9.5% of their income to cover state and local taxes, whereas the state’s wealthiest 1% are using 6.7% of their income on taxes.
Bender, the author of the report, pointed to several tax system changes as the cause for this shift. The laws include a change to tax brackets approved in 2003, as well as lower income tax rates passed in the last two legislative sessions.
Montana’s income tax system is “very progressive,” according to Republican State Sen. Greg Hertz.
Hertz, who represents the Polson area, sent NBC Montana figures from the state’s 2021 tax year. The information from the Montana Department of Revenue showed the top 10% of taxpayers in Big Sky Country had 58% of the state's income tax liability. This made up more than 5% of this wealthier group’s adjusted gross income.
Those with the bottom 10% of income for 2021 paid less than half a percentage of their adjusted gross income in income taxes.
A larger portion of lower income taxpayers’ earnings will go toward taxes like those for gas, fishing equipment and properties, Hertz acknowledged. It would be very hard to have selective sales taxes rates based on different income levels, he told NBC Montana.
“We've done a great job with our income taxes, and I think we’ve basically made sure that the wealthy are paying the fair amount on those,” Hertz said. “Property taxes, we’re in the process of working on those.”
The Montana Budget and Policy Center’s findings disagree. The report says the state’s richest overwhelmingly benefited from last session’s tax cuts. The center projects the top 1% of taxpayers will see an average tax cut of $7,000 a year. This is compared to those with earnings up to $81,000, who are expected to save less than $85 on average.
Wealthy families have disproportionately benefited from the changes to Montana's tax system, Bender said.
“So if you have $1 million in the top income bracket, you’re getting a tax cut on everyone of those $1 million, whereas if you have $40,000, you’re getting a tax cut on only $40,000,” Bender said. The full report is available on the center's website.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.