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Governor vetoes Senator Mangan’s investor tax-deduction bill – Clarification provided by Administration Cabinet Officers

Saying it may encourage income-tax evasion, Gov. Brian Schweitzer has vetoed a Great Falls senator’s bill that gives tax breaks to Montana investors in start-up companies.

Schweitzer vetoed Senate Bill 511, which was sponsored by Sen. Jeff Mangan, a Great Falls Democrat, and approved by the Legislature 2 1/2 weeks ago.

Mangan said Thursday he’ll encourage fellow lawmakers to override the veto in a mail ballot that begins this week.

"I’ve had contact from a number of different folks offering to help override the veto," he said. "I don’t see the ghosts in the bill that (the governor) does."

State lawmakers have until June 3 to vote by mail whether to override the veto. The secretary of state’s office sent out the ballots Thursday.

By MIKE DENNISON
Tribune Capitol Bureau

Full Story: http://www.greatfallstribune.com/apps/pbcs.dll/article?AID=/20050506/NEWS01/505060339/1002

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Governor Schweitzer Vetoes SB 511

Just when you thought the Legislature was done for now . . . We need your help again!

We were just notified that Governor Brian Schweitzer has vetoed Senate Bill 511. It does not show up on the legislative website, so legislative staff must still be recuperating, as well. However, we do have a copy of the veto letter.

SB 511 by Senator Jeff Mangan of Great Falls (http://data.opi.state.mt.us/bills/2005/billhtml/SB0511.htm) sought to provide an incentive to increase equity investment in Montana business. It was specifically aimed at early stage investment in privately-held, small Montana corporations. The corporations it hoped to court are referred to as gazelles and the investors as angels. To achieve this goal, the bill allowed a deduction for individual income taxes on capital gains from the sales of stock for these qualified Montana corporations. It also allowed a deduction from income for the corporations. After a series of amendments to refine the bill, it passed the Montana House 70-30 and the Senate with a 47-3 vote.

We were disappointed to learn the Governor had vetoed the bill. The April 28, 2005 veto letter cites concerns with “new tax loopholes”, “tax avoidance”, “tax manipulation”, and “creative accounting”. This is the same rhetoric we faced from the Department of Revenue in the waning days of the Session when we battled the major tax bills that were ultimately defeated, thanks to your involvement.

SB 511 is a good bill to encourage investment in Montana companies. While it may not by itself guarantee our economic success, it is another good tool, like the film industry credit and the Made in Montana program, that will boost our opportunities. SB 511 does not invite abuse, nor encourage manipulation.

IF there are concerns with language in the bill, that can be fine-tuned in future Sessions. Credits from SB 511 cannot even be taken until 2009. A stated concern with “constitutionality” relates to a court decision in the 6th U.S. District Court that is being remedied on the federal level.

WHAT CAN YOU DO?

Members of the Legislature are being polled at home right now to see if they will uphold SB 511 and reject the Governor’s veto. While we are encouraged by the wide margins by which this bill passed, we know the Administration will lobby them to support their position.

We ask you to contact your legislators (both Senate and House) and any other legislators you know – NOW! They have 30 days from the time they receive their ballot (which they probably already have) but they can return it any time. Since they are home, please use their home contact info. It can be found at http://leg.state.mt.us/css/sessions/59th/roster.asp?HouseID=0&SessionID=88. Remember, time is of the essence, so if you can’t e-mail, please pick up the phone and call them!

Let them know SB511 is a good bill and you want to see it pass. SB 511 will encourage growth of Montana business and Montana’s economy. Montana businesses are committed to Montana’s families and economy. Vote FOR SB 511 and AGAINST the veto. We will be watching.

Webb Scott Brown, CAE, President/CEO

Montana Chamber of Commerce – your business advocate

incl.: Montana Liability Coalition, Montana Manufacturing Council, and Montana Assn. of Chamber Executives

2030 Eleventh Avenue, Suite 21 / PO Box 1730

Helena, Montana 59624-1730

406-442-2405 ext. 101 / 406-442-2409 fax / 406-431-9508 cell

http://www.montanachamber.net / [email protected]

or:

Webb Brown, Executive Vice President

Montana Chamber Foundation

incl.: Governors’ Cup, High School Business Challenge

406-443-7888

PO Box 1162

Helena MT 59624-1162

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