Stop Corporate Tax Evasion in Montana

Independent businesses unfairly handicapped by government favoritism

By Jim Elliot 
Published September 22, 2006

In 2002, 40 percent of the largest 500 companies doing businesses in Montana paid less than $500 in Montana corporate income taxes. Sixty-five of those companies paid less than $500 for four years running.

Legislation is now being introduced in the Montana Legislature to close corporate income tax loopholes so that we can collect the taxes from the world’s largest corporations that are rightfully due the citizens of Montana . The organizations that purport to represent the best interests of Montana businesses will claim that these measures will “create a bad business climate” and “send a message that Montana is anti-business.” That is a bogus argument.

Over the past 10 years of “pro-business” government, property taxes for Main Street Montana businesses have increased while those of multinational corporations have been dramatically lowered. In that same time period multinational corporations doing business in Montana have used bevies of tax lawyers and consultants to lower their taxes by every legal — and some not-so-legal — means.

How has this improved the “business climate” for Main Street Montana businesses?

Montana state and local governments — in their unflagging search to lure out of state businesses — not only ignore already established Montana concerns, but charge them extra for the privilege of facing greater competition.

Small businesses employ 85 percent of the Montana work force, but because of their small size or their type of business are generally not eligible for the tax breaks or the improvements made to roads and infrastructure that are often offered to big business. To add insult to injury, the small business owner has to join other Montana taxpayers in paying for these improvements and tax breaks.

Not only are small Montana retail businesses placed at a competitive disadvantage with national and international retailers because of their inability to use, for instance, the enormous leverage of bulk purchasing that is available to large retailers, but they also pay a higher percentage of their income in taxes because they cannot afford to hire multi-national tax consultants to minimize their income taxes.

But why should we care about this if the soul of business is competition, which hypothetically leads to lower prices?

Because small businesses are not just in the community. They are of the community. They are part of our social fabric because they take part in and have a personal interest in their community. The owners are our neighbors, their kids go to our schools and play in our parks. Small business takes an active role in community fund-raising and civic improvements because they care about the community, not because it’s good “public relations.” Their profits are spent locally. The profits of Wal-Mart and Home Depot go to distant locations.

So I don’t see any logical reason why we should consciously allow our local businesses to be placed at an even greater competitive disadvantage with the business giants. I don’t see any moral reason, either.

Every tax break or “incentive” that big business gets is paid for by Montana’s small businesses, just as you and I as citizens pay for them, either with increased taxes or poorer services. If big businesses have to be forced to the right thing and pay their fair share to operate in Montana, so be it. That is a civic duty that they cannot shirk.

One business owner put it to me as succinctly as can be done: “I don’t want special treatment. I want equal treatment.”

There is no reason why big business can’t operate at the same level of taxation as small businesses, and there is no reason why they shouldn’t. It’s time to turn our attention away from benefiting Wall Street and to pay attention to Main Street Montana. We can do this by making sure that every business operating in Montana pays their fair share of income taxes.

Jim Elliott is a Democratic state senator from Trout Creek. More of his commentaries ar available at his personal website,

For information on state-level tax evasion across the country, see Corporate Tax Avoidance in the States from Citizens for tax Justice. Contact us to learn more about this and other Montana corporate accountability initiatives.

See more features on Corporate Accountability or Independent Business issues