House advances Kris Hansen plan to simplify income taxes

HELENA — A plan to simplify income taxes was endorsed in the Montana House on Thursday as lawmakers continued to advance plans aimed at reducing taxes.

House Bill 581 would reduce the seven different rates that range from 1 percent to 6.9 percent, and replace them with three rates ranging from 1 percent to 6 percent. The measure would also abolish most state credits and deductions.

It was endorsed in a 67-33 initial vote in the House, even though it would get rid of credits dealing with everything from adoption to energy efficiency. An amendment to the bill would strike some school choice tax credits Republicans had planned this session.

Overall, the measure is expected to reduce state tax collections by as much as $20 million a year.

The sponsor, Republican Rep. Kris Hansen, of Havre, said the measure results from an interim study on ways to simplify the state's lengthy tax forms. She said the Department of Revenue predicts the measure will allow it to cut 17 positions, including an attorney who resolves disputes, because it expects taxpayers would make fewer errors under the simpler system.

Supporters said the measure will have to get reconciled with competing tax cut bills as lawmakers make final decisions on priorities over the next month.

Opponents unsuccessfully argued that many of the tax credits are worthwhile and valued by those who use them, such as those providing a credit for adoption, assistance for some elderly people, charitable donations, or alternative energy.

The chamber on Thursday also rejected, in a 53-47 vote, a separate plan to establish education savings accounts for private schools. Backers pitched House Bill 357 as a school choice bill that would make it easier for parents to send children to private school. But opponents argued it would siphon money away from the public school system.

The chamber also made it clear Thursday there likely isn't enough support to change the Montana Constitution to establish an oil tax trust fund, like the state has for the coal tax. The Legislature would spend interest earned on investing the money.

The proposed constitutional amendment only received 53 votes out of 100 in the chamber, and will eventually need two-thirds support in the 150-seat Legislature to be placed on the ballot.

Hansen and Rep. Wendy Warburton, R-Chinook, voted yes. Rep. Clarena Brockie, D-Hays, voted no.