With the 2007 legislative session in the history books, let's take a moment to see how the business community fared. If we truly are “Open for Business” as a state, it is important that our legislation reflect that attitude.
A number of positive changes were made for economic development. Montana is starting to reform our broken workers compensation system, unemployment insurance rates will go down marginally, funding was increased for work force training, and the state may see new energy development.
The business community was able to defeat many anti-business, anti-investment proposals from the Montana Department of Revenue. Under the guise of going after “out-of-state tax cheaters,” the DOR's legislation would have negatively impacted all businesses in our state, not just tax cheaters.
I'm not just saying that as a businessman - I'm also saying that as a licensed CPA. Montana should vigorously pursue known tax cheaters, but not at the expense of law-abiding taxpayers.
If passed, the DOR's bills would have lengthened the corporate tax statute of limitations on Montana businesses, forced Montana businesses to do the tax-collecting work of the DOR, and raised taxes on businesses in Montana.
No, that was not a misprint. The administration had numerous proposals to raise taxes on businesses during a time when our state saw record budget surpluses. New taxes were proposed on real estate investment trusts, unused gift card money, and the DOR is also looking to double taxes on wireless companies.
Are tax increases really the answer when businesses and taxpayers just overpaid a billion dollars to Helena? Are higher taxes on cell phone companies prudent for rural Montana, where reception is still spotty?
Additionally, Montana businesses will see next to nothing in tax relief coming out of the state's billion-dollar general fund surplus. In fact, the administration and several legislators opposed business equipment tax relief because the state could not “pay for” the relief unless it raised revenue elsewhere. They resisted relief that was not tied to the DOR's new tax schemes that would hurt Montana small businesses.
If you consider that increased business activity was the primary reason for the surplus in the first place, it is sad to find out that nothing will be coming back to encourage growth, higher wages and increased benefits for workers.
The big winner this session is the public sector, not the private sector. As a result of increasing general fund spending out of Helena by close to
40 percent in the past few years without returning overpaid taxes on a noticeable level, I worry about the private sector's ability to keep up. While increased spending on education and corrections were overdue, double-digit growth across the board may spell disaster for Montana's ledger down the road.
Just saying that our state is “Open for Business” is hollow when businesses are constantly playing defense in Helena. If we are interested in long-term, sustainable growth that allows our children to stay and work in Montana with good-paying jobs, we have to send a clearer message welcoming business and investment in our state.
Russ Spika is a practicing CPA in Lewistown and chairman of the Montana Chamber of Commerce.
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