It seems like we fight many of the same battles year after year in the legislature. Some of the issues faced by agriculture have been debated since statehood, and they’ll likely still be hot-button issues generations from now. Such is the nature of public policy.
One of those issues that seem to keep coming back in recent years is an attempt to impose a second tax on property called a Real Estate Transfer Tax, or RETT. In general, a transfer tax is assessed whenever property changes ownership, which includes sale, exchange, and could even apply to inheritance. Any type of real property could be subject to a RETT, including residential homes, ag property, businesses, commercial property and raw land.
A coalition of organizations, including groups representing agriculture, homeowners and business have been working to keep Montana free from transfer taxes, and have routinely banded to together each legislative session to educate lawmakers on the negative effects this tax would have on our economy.
But no matter how many times we’ve defeated the transfer tax, it just keeps coming back. The Legislature has considered nine RETT proposals in the past 10 years. From session to session, it seems like some lawmakers just aren’t getting the message that Montanans don’t want a transfer tax.
But this election year we have an opportunity to trump the Legislature once and for all. The initiative CI-105 would amend Montana’s Constitution to prohibit the legislature from imposing a RETT. CI-105 simply inserts brief language into the constitution to state that the Legislature and local governments may not impose any tax on the sale or transfer of real property in Montana. CI-105 presents an opportunity to help protect the future of agriculture in Montana.
Perhaps no industry in Montana would be more affected by a RETT than agriculture. The vitality of farming and ranching depends in large part in our ability to pass on our property to the next generation. The imposition of a RETT could complicate inheritance by requiring the inheritor to pay the tax because the property has changed ownership.
And at a proposed tax rate of 1 percent of the property’s value, the burden of that tax could be the difference between an operation continuing for another generation or a family selling out. Younger generations of Montana producers typically do not have the type of liquid capital that this tax would require. And keep in mind a RETT would be on top of current property and estate taxes already imposed.
Agriculture in Montana already faces enough challenges with rising costs and more competitive markets. To further burden Montana’s most important industry with more taxes would have economy-wide ramifications.
We’re fortunate to have a citizen-driven initiative process that can make law outside the legislature. And this is one example where that right can produce important and long-lasting effects. Let’s protect future generations of Montana farmers, ranchers, business-owners and homeowners from double-taxation on their property by passing CI-105.
And don’t worry about our friends in the Legislature. They have plenty of other recurring debates to rehash—they won’t miss the Real Estate Transfer Tax one bit.
Executive Vice President
Montana Farm Bureau Federation
Executive Vice President
Montana Stockgrowers Association