Don't forget equipment tax fix

Inter Lake editorial

Considering that it's the season of stimulus, we have to wonder just what will happen to proposals to reduce the state's business equipment tax, long considered a major priority for Republicans, who view it as an effective way to stimulate investment and the economy.

During last fall's campaign season, virtually every Republican candidate and many Democratic candidates in the Flathead Valley talked about the need to reduce the business equipment tax.

This week, the Montana House passed the state's major spending measure, House Bill 2, and so far there has been very little talk about reducing the archaic business equipment tax. But there is some, mainly from Sen. Ryan Zinke, R-Whitefish, who is sponsoring a bill that would increase the threshold for paying the tax and also change the way the 3 percent tax is applied.

Currently businesses are exempt from paying the tax only if they have no more than $20,000 worth of equipment. If they have more, they pay the entire amount of the tax. Zinke's bill would provide an exemption to business equipment valued up to $200,000 and would apply the tax only to value beyond that threshold.

Who knows how his legislation will fare in light of the state's dropping revenue forecasts. But Republicans certainly shouldn't back off on a campaign priority that has been at the top of their agenda for years.

Tax cuts for businesses should certainly be regarded as a true form of stimulus with short- and long-term benefits for Montana's economy.

Zinke is spot-on in his observation that the state should "tax profit, not investment. And the business equipment tax is a regressive tax that taxes the very tools businesses need to operate."

Indeed. Consider how an equipment tax can discourage investment in better, more efficient, more productive equipment that can in turn boost profits and lead to a growing business that employs more people.

Zinke's bill would definitely help many businesses, because it's not at all uncommon for small businesses employing just a few people to have at least $200,000 in equipment. Think of independent logging or trucking or construction contractors. Any business meeting the threshold in Zinke's bill would get a $6,000 tax cut, hardly chump change for small operators.

Government at all levels is about to engage in a massive, unprecedented spending stimulus that will largely improve government infrastructure. Yes, private contractors will be doing much of the work, but only certain parts of the private sector (construction for starters' will benefit.

How about a stimulus that all Montana businesses would benefit from?