Editorial: Flat-tax plan doesn’t justify the risk

As Montana Republicans line up in support of Gov. Greg Gianforte’s plan for a single income tax rate for all Montana earners, they should consider what they might be giving up in exchange for simplicity, and reflect on what they already have.

Senate President Matt Regier last week requested the income tax bill for consideration in the 2027 legislative session, with a contingent of fellow GOP senators showing early support.

Since taking office, the governor has reduced Montana’s income tax structure from a cumbersome seven tiers to a reasonable two while also slashing the top rate from 6.9% to 5.4%. These reforms have translated into meaningful savings for Montana workers and improved the state’s economic competitiveness.

His latest plan seeks even more reform, but unnecessarily threatens to jeopardize state funding needs while tossing aside a mechanism that prioritizes low- and middle-income workers.

Gianforte is lobbying to eliminate the state’s modest progressive income tax structure and move to a flat 4.7% tax rate, which he says is more in line with neighboring states. For comparison, Idaho has a 5.3% flat income tax, Wyoming and South Dakota have no income tax, and North Dakota’s progressive structure tops out at 2.5%.

Yet unlike Montana, each of those states relies on a sales tax to help offset revenue needs — a mechanism the Montana Legislature has previously indicated it will not pursue.

Without a sales tax, coupled with the state’s efforts to reduce property taxes, Gianforte is banking on continued economic growth to make up for lost income tax revenue.

That’s a risky bet.

In fact, a report from the Montana Department of Revenue warns that a 4.7% flat tax could lead to $130 million in lost revenue annually without economic growth. Losses of that magnitude would put Montana in dangerous territory when it comes to funding important public programs and infrastructure needs.

In many respects, Gianforte has already achieved his goals. He cut the top rate substantially and consolidated seven brackets into two. By his own account, the state’s economy is thriving under his reforms that created a simple, level playing field. What exactly is he hoping to achieve with a flat tax? Lopping off the 0.7 percentage-point difference between the top and bottom brackets doesn’t promise economic growth, but it does sow needless uncertainty in the state budget.

If the governor truly wants to prioritize Montana families, he should keep his two-tier system and look at expanding the state’s high-income threshold beyond $65,000 for a single filer — a modest figure that aligns with many middle-class workers.

Keeping two brackets while raising the upper threshold may be Gianforte’s conservative sweet spot: a simple, predictable tax code that keeps the state competitive, protects revenue and provides real paycheck relief for working Montanans.