Why a Montana Sales Tax Probably Won’t Win in Vote

During the latest roundabout talk of property tax and sales tax, the host of Montana Talks, Aaron Flint, made a comment.  Paraphrasing, "Whenever the sales tax is brought to the voters, it gets shot down.  Voters don't want a sales tax."

That sparked my brain cells into thinking.  "How is that?  Why do property tax levies sometimes pass, and a sales tax never?"

My brain percolated a theory that a majority of registered voters are not property owners, and therefore think that property tax doesn't affect them.  But they would see a sales tax directly.  And would likely not want it, so would likely vote against it.  On the flip side, even if every property owner in the state voted for a sales tax to replace property tax, there would not be enough votes for the measure to pass against all the voting adults who don't want a sales tax.

Again, this is just a theory.  I am not an Economist.  Just a layman thinking on this.

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Next question: "What are the numbers?"

So I asked an expert.

Before I go any further, Many Thanks to Dr. Pat Barkey of the University of Montana Bureau of Business and Economic Research for his insight on the subject, and to Peter Christian and KGVO News for their article on Montana Ranks High in Registered Voters.

According to Mr. Christian, 741,000 Montanans are registered to vote (by the way, that 77.5% of eligible adults, and 8th in the nation for registration; cool stat).  Dr. Barkey informed me that 365,115 housing units are owner-occupied.

So here's the math: 741,000 minus 365,115 equals 375,885 registered voters who are not property owners.  That is a slim majority of just over 10,500.  So assuming the property owners would all vote for a sales tax and all the non-owners would vote against it, the sales tax would barely not pass.

It's Not that Simple.

Dr. Barkey provided further insight.  "I also believe that in Montana the push back on the sales tax comes down to a lack of trust in government to either (a) reduce the property tax to offset the revenue gain, or (b) hike sales tax rates once the tax is established."

That would broaden the majority against a sales tax.  An appreciable number of property owners still would not like a sales tax because they fear that it won't replace property tax.  Sales tax would just be an additional tax on top of all the current taxes.  It would be an added burden on Montanans.

So while I approve a vote by Montanans to specifically remove the property tax for a sales tax, don't hold your breath for such a measure to pass.  Land and home owners are stuck with this sort of wealth tax...for now.