Feb 11, 2015

In Fiscal Year (FY) 2016, Montana collected $4 billion in state and local taxes—or $3,855 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Montana taxpayer can afford this level of taxation?

To better answer this question, this analysis will calculate Montana’s Tax Burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

As shown in Chart 1, Montana’s state and local tax burden (tax collections divided by private sector personal income) was the eighteenth lowest in the nation for FY 2016 at 13.3 percent—or -7 percent below the national average of 14.3 percent.

#Montana state and local #taxburden in FY 2016 was the 19th lowest in the nation at 13.3%— -7% below US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #MTpol #MTleg #MTsen #MTgov #PolicyData (click to tweet)

As shown in Chart 2, Montana’s tax burden has increased over time by 43 percent to 13.3 percent in FY 2016 from 9.3 percent in FY 1950.

#Montana state and local #taxburden has increased 43% between FY 1950 (9.3%) to 2016 (13.3%) http://bit.ly/2FX9C8F @keypolicydata #MTpol #MTleg #MTsen #MTgov #PolicyData (click to tweet)

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

To put Montana’s tax burden into perspective, let’s compare it to size of major industries in the state (as a percent of private sector income). As shown in Chart 3, Montana’s 13.3 percent tax burden is greater than these combined industries: construction (8.3 percent) and manufacturing (4.1 percent).

#Montana state and local #taxburden > construction and manufacturing http://bit.ly/2FX9C8F @keypolicydata #MTpol #MTleg #MTsen #MTgov #PolicyData (click to tweet)

Montana’s lower than average state and local tax burden is driven by not having a sales tax, but it is partially offset by a higher individual income tax burden (3.9 percent, 14th highest), property tax burden (5.3 percent, 12th highest), and all other taxes burden (3.2 percent, 10th highest).

Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every County in Montana—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.

The 20 Montana counties with the highest local government tax burden include:

• Daniels County, MT (12.5 percent)
• Rosebud County, MT (11.1 percent)
• Big Horn County, MT (10.6 percent)
• Wheatland County, MT (10.1 percent)
• Mineral County, MT (9.6 percent)
• Powder River County, MT (9.5 percent)
• Glacier County, MT (9.3 percent)
• Chouteau County, MT (9.1 percent)
• Blaine County, MT (9.0 percent)
• Prairie County, MT (8.9 percent)
• McCone County, MT (8.3 percent)
• Toole County, MT (7.9 percent)
• Roosevelt County, MT (7.8 percent)
• Musselshell County, MT (7.7 percent)
• Sanders County, MT (7.5 percent)
• Phillips County, MT (7.5 percent)
• Meagher County, MT (7.4 percent)
• Golden Valley County, MT (7.4 percent)
• Madison County, MT (7.2 percent)
• Garfield County, MT (6.7 percent)

The 20 Montana counties with the lowest local government tax burden include:

• Lewis and Clark County, MT (5.1 percent)
• Hill County, MT (5.1 percent)
• Petroleum County, MT (5.1 percent)
• Deer Lodge County, MT (5.0 percent)
• Beaverhead County, MT (4.9 percent)
• Wibaux County, MT (4.9 percent)
• Sheridan County, MT (4.8 percent)
• Stillwater County, MT (4.7 percent)
• Flathead County, MT (4.5 percent)
• Missoula County, MT (4.4 percent)
• Broadwater County, MT (4.4 percent)
• Cascade County, MT (4.3 percent)
• Silver Bow County, MT (4.2 percent)
• Ravalli County, MT (4.0 percent)
• Park County, MT (3.9 percent)
• Gallatin County, MT (3.8 percent)
• Custer County, MT (3.5 percent)
• Yellowstone County, MT (3.4 percent)
• Jefferson County, MT (3.4 percent)
• Richland County, MT (2.1 percent)

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?