Gianforte announces push to reduce business equipment tax again

In a Wednesday appearance billed as the first in a series of events announcing policy priorities for next year’s legislative session, Gov. Greg Gianforte said he wants to raise the exemption threshold for Montana’s business equipment tax.

Speaking at a John Deere dealership in Kalispell, surrounded by businessmen and Republican lawmakers, Gianforte said the move is meant to encourage industry leaders to invest in tools that help them grow the state economy.

“Ultimately, this isn’t the government’s money. It’s the money of hard-working Montanans who’ve earned it,” the governor said.

Gianforte, a Republican, did not directly say what new threshold he intended to seek, nor by extension how much the shift would reduce state collections. A speaker at the event, Montana Equipment Dealers Association Board President Brad Griffin, said he was “proud to be here today to support Gov. Gianforte’s proposal to raise the exemption for personal property taxes from $300,000 to $1 million.”

The governor’s office declined to confirm later Wednesday afternoon that the $1 million figure was in fact his intended proposal.

“We’re still crunching the numbers and do not have specific details to announce, but we’ll let you know when we do,” Gianforte Press Secretary Brooke Stroyke said in an email. She didn’t provide a specific answer to a follow-up question seeking clarification about whether Griffin had accurately represented the governor’s proposal.

If enacted by the state Legislature next year, the change would reduce the taxes larger Montana businesses pay on equipment such as excavators, wheat harvesters and beer brewing vats. Gianforte signed a bill last year that raised the exemption threshold from $100,000 to $300,000.

“We’re going to cut taxes again,” Gianforte said on Wednesday, framing the proposal as a way to provide Montanans with “permanent, long-term tax relief.”

Smaller businesses with inventory valued below the current $300,000 threshold are already exempted from paying the equipment tax and, in most cases, the task of reporting their equipment valuations to the state Department of Revenue.

The equipment tax is analogous to the residential property taxes paid by Montana homeowners, with the assessment based on the market value of equipment owned in excess of the exemption threshold. 

Under current law, the first $6 million of equipment owned by a business is taxed at a rate of $1.5% and additional equipment is taxed at 3%.

The state’s business equipment tax rate was as high as 12% in the 1980s, but has been scaled back dramatically in recent decades under both Republican and Democratic administrations with bills that have reduced the tax rate and raised the exemption threshold. 

Democratic Senate Minority Leader Jill Cohenour, D-East Helena, said in a statement Wednesday that her caucus was looking forward to reviewing the proposal’s fiscal note and evaluating it along with other tax proposals. She also accused the governor’s tax policy of being too favorable to big business.

“As Democrats, our top priorities on taxes are meaningful property tax relief and ensuring that the ultra-wealthy are paying their fair share,” she said. “Montana’s tax policy should benefit everyday Montanans and small businesses across the state. Unfortunately, the Governor so far has been focused on helping big corporations and the wealthy.”

Gianforte has faced calls from Democrats and some Republicans to put the state’s sizable budget surplus toward tax cuts targeted specifically at individual Montanans who are feeling the pinch from the state’s rising cost of living, especially around housing. Democrats called for a $250 million property tax relief effort as part of a list of legislative priorities they unveiled in July. Some Republican lawmakers have floated the idea of rebate checks. 

This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at edietrich@montanafreepress.org.