r/MontanaPolitics • u/Expensive_Goal_4200 • May 01 '26
State How can we tax the rich in Montana?
Everyone knows that we've had a huge influx of wealth in the last six years. Bozeman is famously rich and fancy while the majority of small towns are suffering. I know schools benefit from rich people in their county, but there's enough wealth that we should be able to spread it around a little more.
Aside from the obvious reality that our legislators don't want to, what are the technical drawbacks or challenges of this?
Does anyone here understand our tax system well enough to know how this could work?
The biggest challenge I can think of is that most of the wealthy people who move to Montana don't work in Montana. If you have a work-from-home job out of, say California, do you pay Montana income tax?
If a kid with a multi-million dollar trust fund moves to Bozeman, books an Airbnb for six months, and works from home for a marketing company based in California, do they pay taxes in Montana ... at all?
If the Koch brothers own 5,000 acres in Musselshell County but don't live in the state, are property taxes the only tax income we see from them?
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u/Honest_Search2537 May 01 '26
Why would the current millionaire/billionaire lawmakers that we keep voting in to office vote to take on more tax burden? Until we change our voting habits, they will to continue to shift tax burden on to middle and lower classes.
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u/Turkino Montana May 01 '26
Exactly, This is also part of why they keep pushing for a sales tax to compensate for lowering income or property taxes.
Guess who tends to pay those sales taxes.11
u/sm_axe May 01 '26
Instead of adding yet another tax, how about we backtrack our income tax structure to NOT be regressive and our property tax system to tax fairly (both changes made by our supermajority GOP legislature just since 2021).
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u/sm_axe May 01 '26
And as we continue to dismantle our education system, voting habits will continue to be as ridiculous as the candidates.
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u/Virtual_Visit_1315 May 01 '26
Once upon a time massive tax hikes on the rich was the compromise so the labor riots would stop
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u/EugeneVDebbs May 01 '26
We also used to hold our lawmakers accountable to the people. Class warfare is the only warfare.
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u/meganpicturetaker May 01 '26
Vacancy tax on second homes that folks don’t live in full time, and property taxes on homes over a certain square footage instead of just property value. A Huge multi million dollar brand new house should be charged more tax than a multi million dollar farm with a double wide that someone’s grandparents bought and paid off for $60k 40 years ago. I have friends whose parents are retired teachers who can’t afford the new property taxes on a home they built on a $20k parcel with their own hands in the 90’s. Now the land is worth over a million.
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u/Expensive_Goal_4200 May 02 '26
I like these ideas.
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u/meganpicturetaker May 02 '26
I feel like a square footage tax would also encourage older folks to downsize and open up more housing for young and growing families. Currently (also in CA where I currently live) empty nesters are sitting in massive properties because they don’t want to pay more taxes, or lose a mortgage rate. Adding a mild pain point might help.
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u/CelebrationFar1351 May 01 '26
Stop voting for carpetbaggers would be a good start.
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u/Sturnella2017 May 01 '26
The problem with this logic is that the vast majority of legislators are born and/or raised here. We only vote out of states for the highest levels of state and federal government.
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u/hikealot May 01 '26
The biggest challenge I can think of is that most of the wealthy people who move to Montana don't work in Montana. If you have a work-from-home job out of, say California, do you pay Montana income tax?
Yes. You are still a resident of Montana and pay income taxes in Montana.
If a kid with a multi-million dollar trust fund moves to Bozeman, books an Airbnb for six months, and works from home for a marketing company based in California, do they pay taxes in Montana ... at all?
Probably not.
If the Koch brothers own 5,000 acres in Musselshell County but don't live in the state, are property taxes the only tax income we see from them?
Just the property taxes, but the super rich operate very differently from anyone else, and their property taxes will be a pittance. What they'll do is have employees operate a cattle company on the property. Then it's not a luxury property, but working ag, at least officially. That let's them A) call it a "ranch", which sounds cooler, B ) not pay property taxes, but rather the land is taxed based on "productive capacity" (Value = ((Productivity x Commodity Price) - Expenses) / Capitalization Rate).
So there is a good chance that your WFA person is paying more property taxes - in dollars - than the oligarch with the luxury resort cosplay ranch. They are not rich enough to play this ag property tax shell game.
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u/mistephe May 01 '26
I'm fairly certain that realtors have pamphlets on that property tax strategy in Beaverhead Co. I'm not being sarcastic.
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u/phdoofus May 01 '26
If you're physically here and working and dont pay state taxes you're going to be in for a bad time eventually
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u/phdoofus May 01 '26
Probably difficult if this isn't also their tax domicile. I would suggest at least at the federal level there's some effort made to close off loopholes for things like using equities (mostly the wealth that we're talking about these days) as collateral for loans which are tax free that can then be used as spending money (just because you can't do that doesn't mean there aren't financial institutions willing to do that in return for getting signifcant chunks of equity that will hopefully increase in value). You treat that as taxable income and then we're talking. Probably having stricter limits on ag exemptions so you can't put up six cherry trees on your property and call it an orchard. We'd also need to decide if the current conservation easement mechanism is what we want as well because that can also get abused.
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u/CA-girl2398 May 02 '26
This seems like an appropriate thread to complain that my out of state landlord just put my rent up $500/mth, citing their costs going up due to the new property tax on second home owners.
No, you're the one that's supposed to be paying the additional tax on your $5M house that sits empty 80% of the year, not the renters living full-time in your apartment next door.
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u/callmesavagesavy May 01 '26
We only have 2 tax brackets. We can start there.
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u/Honest_Search2537 May 01 '26
And the current governor wants to reduce it down to a single tax bracket.
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u/Educational-Buddy844 May 02 '26
The last legislative session implemented a version of a 2nd home tax that will lower property taxes on most homeowners, but a oversight in the bill caused property taxes on apartments to go up. They’ll need to rework it again next session.
Unfortunately, our uber-rich governor has repeatedly pushed the income tax rate down for the highest earners (and the brackets are wack now so a majority of families fall into the highest bracket). Even if the legislature enacts a higher tax rate for the highest level earners, he wouldn’t sign it.
Sales taxes are a regressive tax. Let me start with that. A blanket sales tax disproportionally affects the lowest earners. There is a path however to where a sales tax on sectors mainly used by tourist could then allow for a reduction in the taxes that Montana residents pay (i.e. income taxes and property taxes). Tourists to Montana use our roads and infrastructure as much as we do, but the only taxation method they use is a hotel bed fee that’s pretty small.
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u/DameGrenade May 02 '26
Montana does allow for a 3% resort tax in small communities that have high tourism. It is implemented in Big Sky, Red Lodge, West Yellowstone, and Columbia Falls- I believe.
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u/Educational-Buddy844 29d ago
You’re right. There’s a few more on top of those. And those tax revenues generally are used for supporting the infrastructure in those areas. The populations of those areas have to be very low and only 5% of the money generated goes towards property tax reduction inside that municipality. I think a larger scale approach of the same idea would help more people. The current system doesn’t help Montanans that live near the cities, which get hammered by tourists, or in areas that don’t see as many tourists, which are home to some of the hardest working residents.
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u/Nitimur__In__Vetitum Montana May 01 '26
A luxury tax is one way and it’s why the Republicans already made it illegal.
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u/SergeantThreat May 01 '26
One way would be to increase the income tax on top earners. Montana’s top income tax bracket is extremely kind to the rich.
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u/Ilovefishdix May 02 '26
Pay state legislators a decent wage. Right now, we got mostly retirees and the young making up most of the legislature. The few who don't fit into either of these categories are often successful business operators, who don't need to operate their day to day anymore or sold their successful businesses and live off that. It means the working class normies are not represented. Normal Montanans aren't able to leave $50k jobs to serve. We got bills to pay. The rich and retirees vote in their own interests. The business owners write laws to make this businesses more profitable. We don't want rich legislators, but we can't have it so only the well off, old and very young can afford to serve us
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u/Expensive_Goal_4200 May 02 '26
What do you mean “the young”? Are there a high number of young people?
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u/Ilovefishdix May 02 '26
18-24. There's usually a few in every session. Some still lived with parents when they were elected. While it's good to have all demographics represented, I'd rather have more 25-55 year old working class normies representing me and my interests
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u/Wise-Tomato3224 May 01 '26
There's a bit of rhetorical manipulation at play, too. Who is the Montana "everyman" these electeds use as the archetypal everyday Montanan they are legislating for when they tout programs, tax cuts, etc? Farmers and Ranchers. How many of us can afford to own a house, let alone a farm or ranch? How many of us can claim our new pickup as a work expense? How many of us can afford to own or start a business of any sort?
In my small town, these "everymen" ARE the 1% of the community. They don't employ many outside their own family and keep their wealth hoarded up in their land and business. More power to them, I guess, but they aren't the ones who need help.
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u/SuborbitalTrajectory May 01 '26
-More than effectivly one income tax bracket is a start. -Addional property taxes for multiple homes or non-residents. -Resort taxes to keep small tourist communities afloat. -Start assessing home values what they are ACTUALLY WORTH. For instance our glorious leaders house in Helena is assessed at maybe 60% it's full cash value.
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u/Rocky_Missoula May 01 '26
Call Sam Forstag for advice - he takes billionaire contributions all the time, so he has much expertise dealing with their money.
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u/TheCountRushmore May 01 '26
You pay income taxes in the state where you establish residency.
If you move to Montana and work remote then you pay Montana income taxes.
If you stay for a few months and work remote while you are there then you are not changing residency and don't pay income tax.
The answer is probably sales tax.
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u/External-Action-1307 May 03 '26
You do realize that taxing “the rich” means they just take their tax dollars somewhere else, and that tax base is not linear mean it’s not the same as losing the taxes from someone with less means!
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u/linuxhiker May 01 '26
Define tax the rich, because we certainly do.
- They pay more income tax
- They pay more property taxes
Granted the graduated tax on income is a fairly low range. So we could create another tier.
"The biggest challenge I can think of is that most of the wealthy people who move to Montana don't work in Montana. If you have a work-from-home job out of, say California, do you pay Montana income tax?"
Yes. This would describe me (sans the wealthy part). I work for an Oregon Corporation based out of WA. I pay MT Income tax and MT property taxes.
"If a kid with a multi-million dollar trust fund moves to Bozeman, books an Airbnb for six months, and works from home for a marketing company based in California, do they pay taxes in Montana ... at all?"
Legally, yes. Reality? Probably not at least not income or property. They will still pay fuel taxes etc... Their address won't change from their home state. This could be changed by requiring long term AirBNB type rentals to pay a hire tax.
"If the Koch brothers own 5,000 acres in Musselshell County but don't live in the state, are property taxes the only tax income we see from them?"
Yes.
The simplest (and impossible) way to solve this is a transaction tax. Remove all other taxes. No property taxes. No fuel taxes. No income taxes etc... It is basically a two way sales tax on all financial transactions.
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