HELENA-To hear Democratic U.S. Senate challenger Jon Tester tell it, Republican Sen. Conrad Burns has spent federal money with reckless abandon, dishing out tax breaks to the rich as the national debt soars.

And to listen to Burns, Tester as a state lawmaker was a relentless tax-hike advocate, trying to slap new taxes on everything from soda pop to water, while raising the state budget by hundreds of millions of dollars.

Although there are elements of truth to both charges, the facts are more complex.

On few issues do these two major Senate candidates disagree more than on budget and taxes.

Tester has voted for a number of state tax increases, most of which were defeated. Some were intended to lower property taxes on homeowners, farmers, ranchers and small businesses and shift more of the tax burden onto corporations and the wealthy.

Burns, despite his claims of never voting to raise taxes, did vote to end tax credits averaging $2,000 a year that benefited more than 11,000 Montana college students. He hopes that the Senate will address issue next month to prevent these increases.

Under Burns, the Republican-led Congress and President Bush, the federal debt has ballooned to $8.5 trillion under their deficit-spending policies. He attributes some of the huge spending increases on two catastrophes (DASH) the 9/11 terrorist attacks and the aftermath of Hurricane Katrina.

State general spending did jump by $1 billion for this two-year period when Tester was president of the Montana Senate. Some of that increase was required after the state Supreme Court declared Montana's school funding unconstitutionally inadequate.

Tester said, the Legislature balanced the budget without a general tax increase. The Montana Constitution requires lawmakers to balance the state's budget. Congress faces no such requirement.

Burns has been a strong supporter of tax cuts pushed by Bush and passed by Congress earlier this decade, saying they helped revive the national economy.

"I'm pretty much for making permanent all of the tax relief we passed in '01 and '02 and '03," Burns said in an interview. "They've done a remarkable job."

Most of the Bush temporary tax cuts have been extended, with Burns' full support.

Although Tester favors keeping the expanded child tax federal tax credits and elimination of the income-tax marriage penalty, he's critical of most Bush tax cuts that Burns has backed.

"The rest of them don't work for Montana families or small businesses and family farms and ranches very well," said Tester, a farmer from Big Sandy.

Although Burns said his first preference is to eliminate the federal tax on estates, the Republican incumbent said he's "amenable" to the compromise advocated by the Senate Finance Chairman Charles Grassley, R-Iowa, and the committee's ranking Democrat, Sen. Max Baucus of Montana. That plan would increase the estate tax exemption to $5 million per person or $10 million per couple.

"That would take care of the majority of farmers, ranchers and businesses," Burns said.

Estates worth $10 million to $25 million would be taxed at a 15 percent rate, while those valued at more than $25 million would be taxed at 30 percent.

Tester also supports the $5 million-per-person estate-tax exemption, figuring it would cover 99.9 percent of Montana families and their farms, ranches and businesses.

"I'm not in favor of eliminating it," Tester said. "What the hell? Paris Hilton doesn't need the break."

Burns contrasted his tax-cutting record in Congress with Tester's votes for tax hikes in the Legislature.

"Basically he wants to increase your taxes," Burns said. "There's not too many tax bills in the state Legislature that he didn't vote for."

It's true that Tester has voted for some significant tax increase bills as a state lawmaker, including a gross receipts tax on big box stores such as Wal-Mart, a minimum state income tax on corporations, a tax on soda pop to fund elderly services and a fee to fund a speedier adjudication of water rights. Only the last bill passed.

Tester also voted in 2005 to freeze the state property tax on business equipment at 3 percent, rather than allow it to phase out if an economic trigger was met. That tax already had been lowered from 12 to 3 percent in less than a decade. This 2005 bill, which passed, also eliminated the tax on 13,000 small businesses.

Tester defended his record, saying Republicans had been cutting property taxes on corporations for a decade, shifting a greater share of the burden onto homeowners, farmers, ranchers and small businesses.

"The bulk of that relief (under Republicans) went to out-of-state corporations," Tester said.

As for the water fee or tax, Tester said was a bipartisan bill to expedite water adjudication. Both parties are now proposing to drop the fee for at least some water users.

Tester has called for federal tax cuts of $30 billion annually to provide tax credits for first-time homebuyers, a college tuition tax break, a deduction for elderly care expenses and a lifetime tax credit to any honorably discharged member of the military. He would pay for it by having the Internal Revenue Service crack down on businesses and wealthy individuals evading them.

Tester looks for savings by halting the no-bid federal contracts with Halliburton and Bechtel, allowing the federal government to negotiate with pharmaceutical companies under Medicare Part D and stopping federal earmarks for dubious projects like the $233-million "Bridge to Nowhere" in Alaska.

"There's probably a lot of places where we can cut some fat," Tester said. "The truth is, those earmarks made in the middle of the night without any public scrutiny need to stop."

Burns blamed the federal budget increases on 9/11 and Katrina, saying, "I don't know of an administration that has had more disasters happen to it than this administration."

If Republicans hadn't killed amendments to raise spending proposed by Democrats, Burns said Congress would have had to increase the deficit spending by more than $370 billion.

"The only way to take care of the deficit is to grow the economy and limit our spending," said Burns, a senior member of the Senate Appropriations Committee. "Our percentage of discretionary spending has gone down two years in a row. What is really hurting us is the entitlements. Of course, reform is going to be needed there pretty quick, both in Social Security and Medicare."

Burns said he remains opposed to tax increases and disputed Testers' claims that his votes affecting tax credits for students and cuts in student loan funding amounted to tax hikes.

"My philosophy hasn't changed," Burns said.

Burns has criticized Tester the 2005 Legislature's $1 billion in increased spending.

Tester replied the added money was spent to attract new and better qualified teachers, make health care more available to kids and employees of small businesses, provide incentives to attract alternative energy and help create jobs -all without raising taxes.

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