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Policy Basics: Taxes in Indian Country. Part 1 – Individual Tribal Members

Few people understand the nuances of how taxes work in Indian Country. As a result, taxation authority in Indian Country has been one of the most litigated issues between tribes, states, and local governments. Furthermore, there is much misinformation and many missed opportunities for innovative and mutually beneficial inter-governmental collaborations that respect tribal sovereignty. 

This is the first in a series of MBPC Policy Basics reports on taxes in Indian Country. This report provides a brief overview of the taxes that individual Indians in Montana pay. Part 2 will focus on tribal governments and the taxes they pay and assess. Part 2 reviews the state-tribal revenue sharing agreements made between the seven reservation governments and the Montana Departments of Revenue and Transportation

Here is the full report – Policy Basics: Taxes in Indian Country. Part 1 – Individual Tribal Members.

An Early Look at the 2019 Biennial Budget: Montana Needs a Balanced Approach to the State’s Revenue Challenges.

Montanans care deeply about the well being of their families and communities. They want a hopeful and prosperous future for their children and neighbors, safe communities, and a strong state economy that supports quality jobs and thriving businesses. As Montanans, we have come together at many pivotal moments in our state’s history to collectively build toward these goals. Together, we have considered not only what we can afford to accomplish today, but also the investments we must make
to protect our future.

During Montana’s 2017 legislative session, elected officials should be focused on wisely increasing and using the state’s resources to help build opportunities and a path to prosperity for all Montanans through the budget creation process. A recent, but short-term, decline in state revenue, caused primarily by declines in corporate income and oil and natural gas taxes and slower than anticipated growth in individual income taxes, has created significant challenges for the state’s elected officials.

The proposed executive budget creates a responsible blueprint for addressing these challenges through a balanced approach that includes a combination of difficult cuts and targeted revenue enhancers that bring more tax fairness to our system and ensure adequate levels of revenue. Unfortunately, key legislative leaders have indicated a dangerous unwillingness to accept this balanced approach and have instead started the budget process by imposing additional deep, unnecessary, and harmful cuts.

To shed light on the depth of these cuts and the programs and people they will impact, MBPC wrote a report – An Early Look at the 2019 Biennial Budget: Montana Needs a Balanced Approach to the State’s Revenue Challenges.

Supporting information can be found in two supporting documents.

Appendix A – Summary of Total Cuts Adopted in Legislative Committee Starting Motions

Appendix B – Partial List of Executive’s Proposed Revenue Enhancers

 

A State Earned Income Tax Credit: Helping Montana’s Working Families and Economy

In Montana, thousands of families are working hard for low pay and often struggling to get by. One of the most promising opportunities to support working families and boost our economy is the enactment of a state Earned Income Tax Credit (EITC). The Great Recession and other economic trends made it harder for Montana’s families to live above the figure-1-_eitcpoverty line. In fact, nearly 50,000 Montanans are working, but still living in poverty. A sluggish economic recovery increased the struggles for low-income families. In addition, the Montana income tax system taxes families at an annual income far below the poverty line, pushing them further into poverty. The federal EITC program has been one of the most effective anti-poverty programs in history, and a state-level credit could provide the same benefits to Montana families.

Check out this quick report A State Earned Income Tax Credit: Helping Montana’s Working Families and Economy. It details the benefits of a state EITC and how many people could benefit in each Montana county.

Policy Basics: Montana Corporate Income Taxes

Policy Basics is a series of background reports on issues related to the Montana budget and Montana taxes. The purpose of the Policy Basics series is to provide the public, advocates, and policy makers the tools they need to effectively engage in important fiscal policy debates that help shape the health and safety of our communities.

For generations, our tax dollars have served as shared investments in the programs and services that make our state a chart-1-corp-final-jpggreat place to live, work, and play. Tax dollars enable Montanans to work together to achieve things which we could not do alone – educate our children, build and maintain infrastructure, provide public safety through police and fire protection, keep our air and water clean, and pave the way to a stronger and more inclusive economy. Corporations that operate in Montana (whether they own property, pay staff, or sell products) are required to pay a tax as a percentage of their net income earned in Montana. In turn, corporations benefit greatly from our shared investments. For example, corporations hire workers educated through Montana’s public schools and colleges, utilize infrastructure like roads and water systems, and benefit from Montana’s public safety and legal system.

Montana, these shared investments are managed through the state’s “general fund.” Taxes make up the vast majority (96%) of the revenue for the General Fund, and the individual income tax is the single largest source of revenue for the general fund, comprising just over half of the state’s tax revenue. In general, taxes paid by corporations are paid through the corporate income tax. However, depending on how the entity is structured, business income may actually be reported through the individual income tax.

View our full report Policy Basics: Montana Corporate Income Taxes.

Policy Basics: Introduction to Who Pays Montana’s Taxes

Policy Basics is a series of background reports on issues related to the Montana budget and Montana taxes. The purpose of the Policy Basics series is to provide the public, advocates, and policy makers the tools they need to effectively engage in important fiscal policy debates that help shape the health and safety of our communities.

For generations, our tax dollars have served as shared investments in the programs and services that make our state a great place to live, work, and play. Tax dollars enable Montanans to work together for those things, which we cannot achieve alone – a quality education for our children, the development and maintenance of infrastructure, public safety through police and fire protection, and clean air and water. These shared investments pave the way to a stronger economy where every Montanan can thrive.

Read this report and see how Montana raises tax dollars and who shares in the costs of our public investments.

Investing in Montana’s Working Families: A Montana Earned Income Tax Credit

In Montana, thousands of families are working hard for low pay and often struggling to get by. One of the most promising opportunities to support working families and boost our economy is the enactment of a state Earned Income Tax Credit (EITC). The Great Recession and other economic trends made it harder for Montana’s families to live above the poverty line. In fact, nearly 50,000 Montanans are working, but still living in poverty. A sluggish economic recovery increased the struggles for low-income families. In addition, the Montana income tax system taxes families at an annual income far below the poverty line, pushing them further into poverty. The federal EITC program has been one of the most effective anti-poverty programs in history, and a state-level credit could provide the same benefits to Montana families.

Here is our updated 2016 EITC report.

The Montana We Could Be: Tax cuts, aimed at the rich, take a toll

Montana today could be a more prosperous state. Through investments by our state, we could have more modern schools, better roads, updated water and sewer systems, and a greater access to a college education.

Our state does not have these things – not because of a natural disaster or a financial crisis brought on by things out of the state’s control. Instead, Montana is not the state it could be because of the decision made in 2003 to sharply reduce taxes. These tax cuts that mostly benefited the wealthiest Montanans have cost the state nearly $1 billion in one decade.

Read the full report The Montana We Could Be: Tax cuts, aimed at the rich, take a toll.

Tuition Tax Credits: A Threat to Montana-Based Education Solutions

Proposals for tuition tax credits reallocate critical state investment in public schools in our communities, cost the state millions of dollars, and are not a viable option for Montana families, students, and communities. When tax benefit programs were implemented in other states, studies showed that these programs failed to improve access to high-quality education or save the state money. Instead, tuition tax credits divert funding away from public schools, jeopardizing the state’s ability to encourage improvements and innovation within public schools. Montana’s strong public school system already provides varied opportunities for children of all backgrounds, helping to create a well-trained workforce and prosperous state. In Montana, tuition tax credits would reduce the state’s ability to find state-based solutions for improving our education system, threatening the benefits our public schools provide to the wider community.

>>>>Read our full report on Tuition Tax Credits.

 

Initiative 172: Charter Refuses to Pay Its Fair Share

Initiative 172 (I-172) is a fiscally irresponsible ballot measure that will benefit one out-of-state corporation, take money away from our schools and universities, and raise property taxes for Montana homeowners and small businesses.  I-172 sets a dangerous precedent of using the citizens’ ballot initiative to lower corporate taxes, and sets the stage to dismantle centrally-assessed taxation of statewide corporations operating in Montana.

If passed, I-172 will provide a tax cut for one telecommunications company. To offset the loss of millions in local property tax revenue, this initiative will result in tax increases for all other Montana property taxpayers or cuts to local services like K-12 schools, roads and law enforcement.

Read MBPC’s full brief here.

Read MBPC’s statement on I-172 here.

Montana’s Budget: Missed Opportunities

outsiderotundaThe 2013 legislative session was an incredible opportunity for Montana, an opportunity to reinvest in our state following a 2011 Legislature that proposed damaging and unnecessary budget cuts. It was a chance to wisely invest a $435 million budget surplus in ways that help our families boost our economy. In short, the 2015 budget could have represented a new, stronger direction for Montana. However, certain failures of the legislature, primarily the failure to expand Medicaid to 70,000 Montanans meant the 2015 budget did not live up to its potential.

>> Read our report here.