Crying About Closing Tax Loopholes

The Billings Gazette reports that the Schweitzer administration is moving forward with an administrative rule change that would close an abusive tax loophole dealing with land purchases. Basically, without the rule change, people are being allowed to get out of paying capital gains taxes they owe to the state of Montana when they swap their land for land in other states. It's a pretty commonsense rule, but - surprise, surprise - the paper notes that a whole slew of "accountants, real estate agents, title agents, ranchers and business group" are screaming bloody murder.

I know there are folks out there who want to evade taxes. But what's interesting about this story is how brazen some of these folks are in pursuing that goal. They are literally going out in public and demanding the government continue to allow tax evasion for people who move out of state. But as Montana's Senate Taxation Chairman Jim Elliott (D) said, "There is no reason why a Montana resident who engages in one or a series of 1031s should, by dint of residence, pay tax on Montana deferred gain, and a nonresident, again by dint of residence, should escape taxation on deferred gain realized in Montana, even though the transactions are identical."

Preventing tax evasion and closing loopholes is one way Gov. Schweitzer has been able to prevent tax increases and preserve a budget surplus here in Montana. And despite all the whining and crying about the rule change, the fact is there shouldn't be Montana state tax policies that favor out of state interests or favor evasion.

COMMENTS: Go to Sirota's Working Assets site to comment on this entry