Revenue Director To Take Tax Credits For Religious Schools Matter To Montana Supreme Court
The 2015 Montana School Choice program allows for a tax credit of up to $150 to help fund students attending a private or religious school, however, the Montana Department of Revenue ruled that public funding for religious schools violates the Montana Constitution.
Last week, District Judge Heidi Ulbricht ruled that the department incorrectly excluded students from religious schools receiving the benefit, because the program is funded through tax credits, rather than tax deductions.
On Friday, Revenue Department Director Mike Kadas said the issue must be resolved in the Montana Supreme Court.
"I think ultimately this case needs to be adjudicated by the Supreme Court," Kadas said. "Because of that, we will appeal the court's decision, and we'll get a Supreme Court decision that will hopefully lay the issue to rest."
Kadas explained the difference between a tax deduction and a tax credit.
"With a tax deduction, you're reducing the income that is taxed," he said. "Say you make a $100 contribution, so your income would be reduced by $100, and in Montana the top tax rate is about six percent, so the benefit would be six percent of $100. Whereas, if it's a tax credit, you calculate your tax first of all, then you remove the entire amount, so the benefit would be the full $100."
Kadas said using a tax credit might affect the revenue that public schools could receive.
"It would decrease the number of dollars the state is able to generate for all sorts of things, including public education," he said. Either less money would be available, or tax rates would be higher on everyone else."
Kadas said his department needs to exercise its appeal within the next few weeks, and then the timeline would be up to the Supreme Court, and it could take up to a year to get a response.