by Daniel Brooks, Business Advocacy Director
Small Business Week is here and it’s time to celebrate! Before you head off to one of our craft breweries for a toast, I wanted to highlight a few of the bills we supported and opposed during Montana’s 2021 Legislative Session that would impact our small businesses.
HB 252 // Non-refundable tax credit for employer-paid education of trade professions
Llew Jones (R) Conrad
This bill was dubbed the Montana Trades Education Credit (M-TEC). It provided a tax credit for education and training of an employee in a trade profession, anticipated to work at least 6 months during the year in which the training occurs. The tax credit is equal to 50% of the training expenses, not to exceed $2,000 per employee annually. An employer’s total tax credit may not exceed $25,000 annually, may not exceed the employers tax liability, and may not be carried forward or back. Training can be in a classroom, on-site, or online.
HB 303 // Revise business equipment tax laws: Business Investment Grows (BIG) Jobs Act
Joshua Kassmier (R) Fort Benton
One of the Billings Chamber’s priorities is to reduce the cost of doing business in Montana. The Governor’s Business Investment Grows (BIG) Jobs Act accomplishes that goal. Current law allows a tax exemption on the first $100,000 of business equipment subject to the business equipment tax (BET). The BIG Jobs Act would double that exemption to $200,000, effectively eliminating payment of the BET by approximately 4,000 small business owners. With less spending on the BET, this means more spending in our local communities, benefiting businesses that may not even be subject to the tax.
SB 159 // Personal Income Tax Relief Act
Greg Hertz (R) Polson
This bill reduces the top personal income tax rate from 6.9% to 6.5% (as of this writing, 4/4), starting in tax year 2022 and applying to taxable income above $18,500. Relative to other western states, our current top income tax rate is one of the highest which can be a barrier for attracting the best and brightest workforce and new business to Montana. Most of our small businesses file as pass-throughs, so they will see a reduction on their taxes. And while we know tax rates are only one of many factors affecting where people decide to live, our competition has similar outdoor opportunities and quality of life, making the difference in tax rates stand out. And with more money in their pockets, Montanans will spend more with our local businesses.
HB 284 // Provide living wage
Mary Ann Dunwell (D) Helena
This bill proposed to increase the minimum wage in Montana to $15 per hour. Because HB 284 was similar to the recent federal proposal to increase the minimum wage to $15, there are likely to be similar negative impacts which have been studied. A study by the non-partisan Congressional Budget Office titled The Budgetary Effects of the Raise the Wage Act of 2021, found that increasing the federal minimum wage to $15/hr would lead to a loss of 1.4 million jobs. The study also points out that, “Young, less educated people would account for a disproportionate share of those reductions in employment.” Similar negative consequences were likely to be felt in Montana if this bill passed. Fortunately, it was tabled in the House Business and Labor Committee.
HB 363 // Provide for tax on digital advertising services
Jeremy Trebas (R) Great Falls
This bill proposed a 10% tax on digital advertising receipts generated from Montana clients, potentially raising $22 million for the state general fund. The tax was limited to those entities with annual global digital advertising revenue of at least $25 million—namely, tech giants headquartered outside of Montana. This kind of tax is often passed on to the consumer. In this case, small businesses paying for promotions on social media and other platforms. Adding this onto the cost of doing business is not helpful while we’re still recovering from the pandemic. The bill was tabled in the House Taxation Committee.
HB 378 // Create a mini-COBRA law for small employer health insurance
Mark Thane (D) Missoula
This bill proposed a mandate on small businesses providing healthcare coverage to also carry COBRA coverage, an extension of benefits beyond employment. It was intended to mirror the federal program which is restricted to businesses with 20 employees or greater. Our small business, with 19 or fewer employees don’t need this additional operational burden, driving up the cost of doing business in Montana. The bill was tabled in the Senate Business and Labor Committee.
We hope to see you at our Legislative Wrap-Up event on May 11th to learn more. If you have further questions about the Billings Chamber’s work throughout the session, don’t hesitate to reach out to Dan (firstname.lastname@example.org). Alright, time for that toast—let’s go get a local brew.