Notes
Slide Show
Outline
1
Martz Administration
Tax Reform Proposal
2
Comparison States
Adjacent States and  Rocky Mountain Region
3
Effective Property Tax Rates
in Residential Property
4
Montana Property Tax Burden
National and Regional Comparison
5
State Corporate Income Tax Rates
6
Highest Statutory Income Tax Rate
7
Average Effective Individual Income Tax Rates - Montana’s Regional Ranking
8
Top Effective Marginal Rate of
Tax on Capital Gains Income
9
Simple Calculation of
Top Effective Marginal Tax Rate
After Federal Deductions on Income
10
Income Tax Problems and Solutions
  • Problems:
  • Perception of high marginal income tax rate
  • Highest marginal capital gains rate


  • Solved By:
  • Reducing stated top income tax rate from 11% to below 7.0%
  • Reducing Montana’s capital gains rate by at least 25%
  • Lowering effective income tax rates for all filer types
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Example of Concept of Individual Income Tax
Proposal Including Elimination of Federal Deductibility
12
Sale of Business, Farm or Ranch
Example of Concept of Capital Gains Tax Reduction Under
Income Tax Proposal Including Elimination of Federal Deductibility
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Impact of Eliminating the State
Individual Income Tax and Fully
Replacing with a State Retail Sales Tax
Tax Year 2001
15
What is a tourist tax?
  • A narrowly focused tax on specific items that non-resident tourists purchase, resulting in tourists paying a high percentage of the tax.
  • Montanans would also pay a portion of the tourist tax when they buy taxable items.
    • The tax Montanans would pay under a tourist tax would be more than offset by the savings from the 10% income tax reduction.
  • Generally, Montana has the lowest taxes on tourists in the region.
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Items Taxed in a
One Week Vacation
  • Car rented in largest city in state and driven 1,000 miles
  • $80 per night on lodging
  • $100 per day on meals
  • $100 per day on other taxable purchases
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Tourist Tax Collected
on Vacation
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Shift of Tax Burden
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Financial Outcome
  • Revenue neutral to state government
  • Decreases state taxes for Montana residents
  • Increases state taxes for nonresidents
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Local Option Tourist Tax
  • Voter approved
  • Potential uses of tax revenue must include property tax reductions and economic development projects
  • Same taxable items as statewide tourist tax
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Questions?
22
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