Does Lichtenstein set Montana tax policy?

Would you believe that the Senate Taxation Committee would get a letter from the ambassador from Lichtenstein claiming that Montana tax laws are an insult to his country? And would you believe that the largest association supposedly representing Montana businesses would suggest that letter is evidence that Montana has a hostile business climate?

Never mind that the topic about which those claims are made is one small part of an obscure little Montana law that gives a big income tax break to large, international corporations who park their Montana profits in overseas "tax havens" where they are not subject to income taxes. The obscure little law is called the "water's edge" election. What the ambassador and others are complaining about is not the water's edge election itself, but a provision within that law that lists a number of countries around the world that these corporations are not able to utilize as tax havens.

Now, most Montana businesses are not able to utilize the water's edge election to shelter their Montana income from taxation and, therefore, they are at a competitive disadvantage to those companies that can.

Sounds complicated, right? You bet. But do the legislators offering tax simplification bills propose to eliminate this little $6 million dollar advantage to large international businesses over Montana businesses? Not on your life. They'll propose taking away a little tax credit for putting an energy efficient furnace in your home or taking away a small exemption on the first part of certain retirement income. They'll reinsert the "marriage" penalty into Montana's income tax law without any corresponding relief for single persons. They call that "tax simplification." But they won't agree to eliminate the water's edge election. Go figure.

As always, I'm interested in listening to your thoughts and ideas on the legislative process. Your input ensures that citizens continue to run our democracy. Please email me online at http://leg.mt.gov/message/, call me at 406-444-4800, or write me at Montana State Senate, PO Box 200500, Helena, MT 59620.

Thanks for reading — until next time.

(State Sen. Greg Jergeson, D- Chinook, represents Senate District 17, which includes Hill and Blaine counties. During his 31 years of service as a state senator and public service commissioner, Jergeson has served north-central and northeastern Montana, including Liberty, Hill, Chouteau and Blaine counties. He'll be sending a weekly "Hello from Helena" update to keep the Hi-Line informed.)