The Missoulian: Trump tax reform plans need work, Montana delegation says
Now that the dust has settled on President Donald Trump’s tax reform plans, Montana’s congressional delegation likes what it sees, though not without a few changes.
Sens. Jon Tester and Steve Daines, along with Montana’s lone U.S. Rep. Greg Gianforte say they will support tax cuts if done right.
For Tester, a Democrat, that means more tax relief for the middle class and small businesses.
“There are some things in here, once it gets hammered out, that could be possible, but I’m looking at it as ‘Is it simplified? Does it benefit small businesses and middle-class families?'”
House and Senate lawmakers began outlining the tax reform plans the first week in October for heading home for a week-long Columbus Day break. The child tax credit would increase and the standard deduction, based on your filing status reduces the amount on which you are taxed, would double. Homeowners would still be allowed a mortgage deduction. Those are changes Tester said he can get behind.
Other parts of the tax reform conversation have Tester concerned. The current proposal could increase the national debt and deficit as the federal government takes in less money to pay for government services. Tester said he’s heard the debt increase could be as high as $2 trillion, a number Republicans say will be avoided as economic growth stimulated by tax cuts results in more revenue for federal coffers.
The formula used to predict more tax revenue even as taxes are being cut, is known as dynamic scoring. It hasn’t worked out in the past. Tester said the national debt pitfall could be avoided if the Senate taps the brakes on passing the tax reform by year’s end and takes time to listen to the public.
“You can’t increase the debt a trillion dollars,” Tester said. “If you want to do something like that, invest it in infrastructure.”
Daines and Gianforte, both Republicans, say tax reform done right should produce more revenue for the federal government even as corporations and individuals are taxed at lower rates.
“The bottom line is, we’re going to be looking at what these tax reductions will do to grow the economy and assuring that it actually grows revenue and it’s deficit neutral,” Daines said. “So I want to see analysis that would show that.”
More than 42 percent of Montana’s budget is paid for with federal dollars for programs like Medicaid, Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program, better known as food stamps. With an already tight budget, cuts in federal funding could compound Montana’s budget challenges.
Tax reform has to pass in order for Republicans to live up to promises made to conservative voters, Gianforte said.
“This is a do-or-die situation for the Republican leadership,” Gianforte said. “I’m hearing from many people saying, ‘Listen, you guys better get your act together.’ We need to get it done by the end of the year or we’ve missed our window.”
There are concerns about the tax reform effort being raised by groups like AARP and the Montana Budget and Policy Center, a group that focuses on the budget decisions mostly affecting seniors, children and working families.
Heather O’Loughlin, MBPC co-director, refers to an Institute for Taxation and Economic Policy study that suggest the majority of the tax breaks will go to the richest one percent of Americans, that is people earning $500,000 a year or more. The average tax cuts for that group would be $69,000 a year, O’Loughlin said.
Tax reform would do more good if that money was distributed to the middle and lower income classes so that more people had a larger tax break to spend on whatever they wish. The current savings being discussed wouldn’t provide a significant amount of savings, she said.
“Low- and moderate-income families would see small tax cuts,” O’Loughlin said. “Those with yearly incomes less than $60,400 would see an average tax cut of about $190.”
As some current tax deductions are eliminated, it’s possible that some middle class families could see taxes increase, she said.
Daines said there’s a lot of tax reform work ahead, that’s it’s too soon to write off tax reform for lower- and middle-income Montanans.
“What’s been proposed is quite a ways away from being a finished piece of work,” Daines said. “It’s going to be moving through the committee process. I didn’t like the lower tax rate being increased from 10 percent to 12 percent. That’s got to be cut back to 10 percent.”
The tax break for middle-class Montana families has to be more, he said.
By: Tom Lutey
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