Montana Viewpoint: A way to address high property tax

I just read an editorial called “Let's end the property tax blame game” by Kendall Cotton in which he begins by blaming local governments for property tax increases, echoing Governor Gianforte’s attack on greedy county governments. For their part, Democrats are saying that the Gianforte administration ignored the advice of the DOR to implement a revenue neutral tax rate. That’s the rate at which the state would have received the same amount of money after reappraisal as it had before. It was not advice; it was a number the DOR is required to provide by law. And to be fair, it doesn’t seem that any Democrat introduced a bill to change the tax rate, either. (In Montana the appraised value of a home is multiplied by a tax rate to get the taxable value, which is what the mill levies are applied to.)

If I wanted to blame anything I would pin it on Covid and the TV series “Yellowstone” each of which caused people with money and independence to flock to Montana and raise the price of homes in those areas that are not surrounded by flat land and have fancy restaurants.

Cotton’s editorial goes on to state: “There is no such thing as a free lunch in government. The root cause of taxation is government spending.” So, the simple answer is to get rid of government—and police forces and courts and schools and health care and highways and everything that government does, because it is asked to do it. Lincoln put it well:

“The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves—in their separate, and individual capacities.”

No, Mr. Cotton, the root cause of taxation is the need to pay for services that the public demands their governments provide as expressed by their approval or disapproval of political policies at the ballot box. Not everyone is happy, but in a democracy, the majority rules.

So, OK, what to do? The property tax is the oldest form of taxation because it was the easiest to figure out. If a guy in Babylon was sitting on 1,000 bushels (or cubic cubits or however they measured volume then) of wheat the government knew what wheat was selling for and taxed it accordingly. A property tax is a tax on wealth, it is based on the value of what you own. It is the only tax that is heavily based on external market forces and not individual actions as are wages earned or purchases made. If you look at maps of property tax increases in Montana (the Montana Free Press has an excellent analysis complete with such maps: https://montanafreepress.org/2023/12/07/how-much-montana-property-taxes-are-rising/ )you can see that it varies quite a bit from county to county. That’s why it is difficult to find a statewide solution.

Yes, there is a temporary tax rebate which some had a difficult time applying for. I didn’t. Renters couldn’t. But this is a political gimmick used by Democrats and Republicans alike that does little to fix the problem.

The answer to all this, given the complexities, is relatively simple, already exists, and is capable of being broadened. It is the Elderly Homeowner Renter Property Tax Rebate. It is based on the principle that homeowners or renters should not pay more than a certain percentage of their income on property tax. It is now restricted to households with a person over 65 years old, a coddled cadre of individuals who as a group are generally financially better off than others because they have by that age paid off most of their debt. Their favorable opinion is sought by retailers and politicians alike because there are so many of them (OK, us).

It has the benefits of putting the relief where it is most needed, does not rob the local taxing jurisdictions of needed income, is administered and paid for by the state using state employees and state money. And, if expanded to all ages, is fair. At least two bills were introduced to do this by Democrats but never made it out of committee.

Maybe by the next legislative session it will look better, but I doubt it.

Montana Viewpoint has appeared in weekly and online newspapers across Montana for over 25 years. Jim Elliott served 16 years in the Montana Legislature as a state representative and state senator. He lives on his ranch in Trout Creek.