To understand Missoula attorney John Bennett, start with his cars.
First, the silver '08 Ferrari Spider. It's a head-turner that he won't park in public, so he queues up some photos on his phone while sipping coffee at Meagher Bar. Bennett is a regular here—it's next door to his law office. As he swipes the screen to display a photo of the car's Montana license plate, the word "GIANNI"—the Italian form of his name—appears. Bennett obviously isn't Italian, "but I wish I were," he concedes.
Then there's the red '67 Fiat Dino Spider, a two-seat convertible, Bennett's favorite ride. It doesn't bear Ferrari's prancing-horse badge, but Bennett says both the engine and the body have ties to the legendary automaker.
"It's basically a Ferrari, but I didn't have to pay classic Ferrari prices," he says.
That kind of savvy is how Bennett has made his living for the last two decades. He's the guy that rich people nationwide, but mostly from California, seek out so they can avoid paying sales tax on luxury cars and RVs by registering them in Montana. Bennett has turned this loophole into a cottage industry—and a lucrative one. His firm sets up LLCs for hundreds of clients each year, saving them as much as $42,000 in taxes on a $500,000 vehicle.
On this day, though, Bennett is frustrated. He has just returned from Helena, where he and the lobbyist he hires every two years have been unable to deter lawmakers from, in his words, "killing the golden goose."
Desperate for revenue, Gov. Steve Bullock and state legislators want a cut of the mostly legal tax-evasion industry. House Bill 650, which was headed to Bullock's desk at press time, would impose an additional 1 percent registration fee on cars and motorhomes with sticker prices exceeding $150,000. State fiscal analysts expect the so-called Ferrari tax to bring in $5 million annually. Bennett says lawmakers don't understand his clients.
Bennett realizes that opposing a 1 percent luxury tax on toys for the ultra-rich isn't the most sympathetic negotiating position, so he keeps his arguments pragmatic. Rather than generate revenue, Bennett says, the Ferrari tax will drive clients to other tax havens, since Montana will no longer be the "low-cost option." The $2 million in out-of-state money his firm directed to state coffers last year would be in jeopardy, he argues.
Tax-free vehicle registration has been scrutinized by other states, and not everyone plays the game aboveboard. Bennett says he does. He even manages a separate company that stores his clients' new cars in a Montana storage unit until their home state's "sales tax test period" expires. And for years, Bennett says, he has worked to craft a reputation for "no bullshit or spin" in Helena.
While Bennett says the Ferrari tax won't put him out of business—he'll just hire some staff in other "low-cost" states—he finds lawmakers' proposal this session unsettling. The goose may not be cooked, but Bennett is starting to feel the heat.
"I'm a little frustrated that they didn't call me [first]," he says.
Update, 4/27/17: After this story went to press, the Montana Senate scaled back the Ferrari tax by amending a separate bill. The amended tax would impose a flat $825 registration surcharge for each of the first 10 years on cars costing over $150,000, rather than 1 percent of the MSRP. For RVs worth more than $300,000, the fee would be $800. This morning, the House approved the changes. Read more here.