Taxes in Montana - Tribune

[SonomaCat]

If anybody knows Mr. Elliot, could you please sit him down and explain to him that if he wants a tax on gross receipts, all he has to do is support a sales tax? Taxing corporations that are losing money is just... really stupid, even if they are "big evil corporations," as the prevailing populist logic goes. At a time when Montana should be doing everything it can to attract business (as jobs and the taxes on the salaries alone are a boon to the local economy and government), you have people like this putting out the perception that Montana will come after you even if you are unfortunate enough to be losing money. With all of the chatter about jobs being outsourced overseas due to cheaper business climates, has it been lost on some people that this happens domestically all of the time, and that cheaper cost of living states like Montana should be actively recruiting these types of businesses as opposed to scaring them off?

http://www.greatfallstribune.com/news/s ... 72777.html

I have been doing corporate tax work for about 10 years, so this kind of stuff is way too near and dear to me to let it pass without blowing off some steam.

[hokeyfine]

bac: people in montana are not progressive. they want a balanced budget. good jobs, pay, etc. they don't care. if you want to be governor promise a balanced budget. give the usual double talk with jobs and taxes but you don't have to deliver on it. the leaders of this state think it's future and savior is the tourism industry. and god forbid that you bring up sales tax, eventhough lots of communities have a resort tax. this is a bit cynical, but from my observations everyone wants something for nothing. they have no idea why they vote for who they do. we've had republican governors for the last three terms who have accomplished nothing besides the balanced budget. we have a split legislature that has accomplished nothing besides a balanced budget. locally we have an elderly population that will not support school levy's but demand that senior citizen levy's pass because they are vital.

[SonomaCat]

The Tribune editorial page almost seems to agree with me, which is a rare display of wisdom on their part (sarcasm intended). Between this piece and their scolding of the union guy from Butte for trying to make a stink about the employment of a couple non-Montana construction workers on the malt plant, the editorial page in general seems to be taking a strange pro-business slant.

http://www.greatfallstribune.com/news/s ... 17147.html

The one thing they do mess up is their closing paragraph. Corporations have a duty to give financial information to their shareholders and to the taxing authorities, but unless they are a public company, they have no, and should have no responsibility to tell jack squat about their finances to the general public. The general public has no more stake in knowing a privately-held corporation's finances than it does in knowing what Joe Schmoe down the block does with his money. Similarly, these corporations are no more inherently evil than Mr. Schmoe.

I also have a feeling that most of the companies in question probably are public companies (based outside of Montana and selling into Montana) and as such, virtually everything you would ever want to know is already out there and available to the public. The fact that it is not spoon-fed in populist-consumable portions to one media-hungry Montana legislator is not news worthy.

[kmax]

BAC, I couldn't agree with you more, the editorial makes a good point here:

We need to collect every penny in taxes due from corporations in this state. However, we first must create a business climate and tax structure in which companies can make money so that we have corporate income to tax in Montana.

But to go on and say that in order to do that businesses should be opening their books up so that the politicians can see why they are not making money is absurd. If any politician, Elliot included, actually wanted to ensure the tax structures in Montana were business friendly all they would have to do would be to sit down with the CFO, CEO, or President from a few of the larger corps in Montana and talk with them. The one good thing is that it seems some may be starting to realize that the Montana tax structure is part of what is holding back business and Corporate growth in Montana. If they feel they should be getting more money from corporations that are loosing money already, then we will be going backwards instead of forwards.

[lifesapuntreturn]

I agree with much of what all of you have already said so I won't re-iterate it. It is very frustrating to me, and has been for many years now, when I read articles like the Tribune's, quoting/interviewing state legislators who just don't know what they're talking about or the ramifications of their lack of knowledge regarding the connection between tax structure and business climate in Montana.

An equally big concern I have always had when things like this make it into print is regarding businesses out there, in other states, who are planning to expand their operations and are looking at Montana as a possibility. They see an article like this one, or somebody passes it along to them, quoting a state law-maker, someone who should know what he's talking about, and they think "Wow" as they cross Montana off the list. In addition, they have long memories when it comes to this sort of thing.

The best recruiting tool a state (or city) can have when trying to recruit new business into the state is to have current businesses within the state beat the drum for that state's business climate. Montana just doesn't have many businesses that will do that, and articles like this one aren't doing anything to improve that, in my opinion.

[SonomaCat]

puntreturn: (I love that moniker, by the way) I totally agree with what you said. In fact, there are a lot of states and provinces that invest quite a bit of money into marketing directly to companies, especially here in Silicon Valley. Sometimes, a little pitch by someone from the state, along with some business friendly tax laws to brag about, plants the seed that leads to a lot of jobs in the long run.

Especially as our economy moves away from heavy manufacturing and into high tech services (heavy, costly shipping cost vs. electronic transmission anywhere in the world), it is making less and less sense for companies to pay top dollar for labor and real estate in high cost of living areas when they could pay much less and have a much higher quality of life (and be able to buy a lot nicer houses) in places like Montana.

But first, like you said, there has to be a general business climate that says "Yes, please come here and join our community" as opposed to the current "We're going to bend you over and extract taxes from wherever we can because you are an evil large corporation, and by the way, we hate all people from California, so take your high paying jobs and go back where you came from."

I would love to see the day that I could do the type of work I do for a living right now (nonpolluting, good paying and community oriented company) in a place like Bozeman. That would be heaven for most people I know. Fortunately, companies like RightNow and Zoot are making a go of it. I hope the state gives them as much encouragement and assistance as possible, and maybe someday there will be a critical mass of that kind of company in Bozeman which will lead to the kind of business growth that could lead to a real hub of tech for the region.

First step (pay attention Montana legislators): Generous state R&D tax credit. Other states are doing it, and other states are drawing these businesses. You can't beat that trump card when you are marketing to tech companies looking to relocate.

[kmax]

The problem as I see it, and why I unfortunately don't see this changing in the near future, is that our legislature is made up of part-time legislators, that in large part come from rural parts of Montana. Most of the rural parts of Montana still feel burned by the "corporations" that have forced many a family off the ranch or farm(not that I don't agree with them in some cases, mind you). Thus the idea that all corporations are evil and there is no way many of these people are going to be a part of tax reform and drawing more of these "types" of companies to Montana. What they fail to understand(or maybe just refuse to) is that the future of Montana has to be something other than agriculture and tourism as it is just not a stable enough base to provide good paying jobs to the many people in the state. Providing some basis for the economy in a viable progressive industry(doesn't have to be tech, as there are others) is what will allow Montana to keep moving forward and provide more for the tourism and agriculture industries, not the other way around.

I really like what our federal legislators have done to help Montana businesses in Washington. I know that both Burns and Baucus have done work to help out companies even in Bozeman. Now if we could just get that mentality to filter down to the state legislators, we might actually starting moving forward.

[SonomaCat]

kmax: I have to somewhat disagree with you on that one. It seems to me that most rural folks in Montana, especially in the farming communities, are the most hard-core pro-business types around. They are the self-employed who fully understand the tax structure and its impact on business. In general, it is the Republicans who want to make the state more business friendly, while (also in general) it is the Democrats who make noise about the evils of business (especially relating to tax, government regulation, etc.).

The farming communities tend to be represented by Republicans in Montana, while most of the Democrats tend to come from the formerly industrial areas where the labor influence still holds a lot of weight, such as Great Falls, Butte and even Havre to some extent.

I am not anti-labor in all cases, but it seems like there are a disproportionate number of unfavorable business comments attributed to Montanans who are connected to labor and from legislators from historically Democratic districts.

To balance the post just a touch, I should go strong in noting that I certainly don't agree with Republicans on every issue -- just most of the tax issues.

I would be curious to know the Republican/Democrat MT legislature numbers as a function of the rural/urban split in the state. Maybe I'm wrong on this, but it always seems that the Republicans were much stronger in the rural areas, and in Montana (which isn't exactly a fire and brimstone Bible belt state) this usually points to tax/economic policy as opposed to conservative social values.

[kmax]

I don't have any numbers, but I would agree about your assumptions on Rep/Dem vs. rural/urban styling, though I would have to say that I don't think it is as pronounced as it once was. While Montana isn't exactly a fire and brimstone Bible belt state to indicate party line dinstinctions, I would say that environmental issues are gaining alot of ground on tax/economic policy as a party divider for certain areas and seems to have helped shift some areas.

I also agree that farmers and ranchers may tend to understand business more, however I don't know that I would call them the hard core pro business folks, at least not in the sense of industry type business. I could be completely off base here(wouldn't be the first time), but while the farmers/ranchers do have business sense, it has been my experience with family and such that they use that to look at it from a small business perspective rather than an industry and large business perspective. Don't get me wrong, I am not trying to say we need to get rid of the small bussinesses or anything, but the only people that get good paying jobs out of them are usually the owners. In order to start luring industries here that will provide many good paying jobs, we need people who are thinking bigger while hopefully still keeping the little guys in mind.

Just my $.02.

[lifesapuntreturn]

I agree wholeheartedly on the R & D tax credits. Other similar tax programs should be encouraged as well.

I don't know how Idaho's tax law is compared to Montana's (aside from Idaho having sales tax and Montana not) but I look at the tremendous growth in the Boise area over the past 15 years or so and wonder exactly how they have achieved that. I flew in there a few years ago after not having been there for about 10 years and I was amazed to see the growth in that area. I also think that if people/businesses are interested in moving to Boise, why wouldn't they be interested in moving to Bozeman, Missoula, or Billings? Anybody know what Boise's secret is? I know Simplot and Albertson's money was already in the area, and of course there's BSU, but what else is there I'm missing? Is it Troy from "The Apprentice"?

I don't know the demographic makeup of the current legislature but in years past it has been largely 55+ in age. I also assume that many/most legislators are either self-employed or work in the family business, or they are retired, thus giving them the ability to take off large chunks of time every 2 years to serve in the legislature. If they are able to take off that much time from their business, that tells me they must be doing fairly well financially. Taking this one step further, I think that since many legislators are personally financially secure, they are not inclined to make many changes in the business climate. They figure "I'm making it with things the way they are so why change things" or something along those lines. I think there's also a "we don't want any more people here" mentality among many people in the state, and the best way to keep people out is to keep corporate business out. Which keeps the economy tourist and agriculturally based.

As far as the existing small business owners are concerned, I think many of them fear the large corporations from a competition standpoint, both in terms of losing customers and in terms of losing qualified employees, or at least having to pay employees more to keep them. If they own a local hardware store or drug store or clothing store, then I can see them fearing Home Depot or Costco or Wal-Mart, but in the non-retail sectors I don't think that mindset has much validity.

I know there are also small business owners in Montana who feel they are paying taxes to the state that go to higher education when they get little or no benefit in return. They feel the higher ed system is simply educating Montana kids who then go out of state to work, so why should Montana businesses pay to educate other states' workforces. Of course, when you point out to them that most Montana higher ed grads want to stay in Montana after graduation but cannot do so because there are no jobs in their field, or the jobs that do exist pay so poorly that grads cannot afford to stay in Montana, they don't like to hear that. So, in that instance, things cut both ways and neither the small business owners or the grads are happy about it.

[Bleedinbluengold]

The way Elliott can get more information is by discussing how to structure Montana's tax code for the future. Once that discussion is started in earnest, believe me, the officers and lobyists of the corporations that Elliott wants to know more about will come out of the woodwork.