Seeking tax transparency 

Say you’re elected to the Legislature on Tuesday. In a few months you’ll head to Helena, where you’ll be asked, if history is any gauge, to pass a law lowering some corporation’s taxes. Perhaps, in trying to evaluate that request and balance it against the state’s revenue requirements, you’ll want to peruse what taxes that corporation—or any corporation—already pays in Montana. The tricky thing is that under current Montana law, you can’t get that information.

Sen. Jim Elliot, D-Trout Creek, aims to change that situation with a lawsuit he filed against the state revenue department Oct. 18. The suit would force the department to release income and tax information about corporations doing business in Montana.

Such information is currently kept under wraps due to a 1993 law that Elliot contends violates the public’s right to know as enshrined in the state constitution.

Elliot admits that he himself voted for the 1993 bill. At the time, he says, “I guess I trusted corporations more.”

Since then, however, Elliot has done a bit more digging. During the 2003 session, while researching Texas’ franchise tax—basically a property tax on corporate wealth—he asked the legislative auditor for information on the top 500 companies doing business in Montana. Of the publicly traded companies, he learned, 40 percent paid less than $500 in annual taxes, and 25 percent of those paid $50 or less.

What does Elliot make of those numbers? Without more information, he says, it’s hard to tell if it’s what it looks like: a tax dodge.

But when Elliot went back and asked for numbers from 2000 and 2001, he says, the Montana Taxpayer Association stepped in to ask the Department of Revenue not to release that information.

Corporate income taxes, Elliot maintains, are not subject to the Montana Constitution’s privacy protections because while corporations are legally “persons,” they are not legally “individuals,” to whom Montana’s right to privacy applies.

“Corporate tax evasion has been burgeoning over the years,” Elliot observes. Auditing firms pull double-duty as consulting firms—“a conflict of interest of the first order,” Elliot says—and offshore tax shelters drain state and federal treasuries.

Meanwhile, the rest of us are, as the self-defeating saying goes, paying to live here. Why shouldn’t the corporations?

A hearing is scheduled in Helena for Nov. 23.

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