“Bringing Taxes Down Still Doesn’t Quite Compete With Not Having A Tax”

ND Reatail Marketers open

The North Dakota Chamber of Commerce is continuing their pesky billboard campaign in Minnesota, advertising

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North Dakota’s friendlier tax environment relative to the eastern state (to the chagrin of political leaders there). And North Dakota should stick it to Minnesota. As we can see from CNBC’s map of the most business-friendly states, both North Dakota and South Dakota have a big advantage over high-tax, high-spending Minnesota.

But that’s not to say that North Dakota doesn’t have work to do.

Yesterday I pointed out that North Dakota’s energy-driven economy couldn’t top South Dakota in CNBC’s ranking thanks to higher taxes and bigger government.

Many in the state don’t want to hear it, but North Dakota’s leaders are, on the whole, spendthrifts who are hostile to meaningful tax relief. And even some politicos in the state are admitting (grudgingly, it seems) that North Dakota could be doing more on that front:

South Dakota ranked number one in the national study, [Bismarck-Mandan Chamber of Commerce's Kelvin] Hullet says that could be because South Dakota doesn’t have a state income tax.

“And so that greatly enhances their competitive environment, we’ve lowered taxes dramatically in North Dakota, this last session we saw taxes go down by more than a billion dollars, but bringing taxes down still doesn’t quite compete with not having a tax,” Kelvin Hullet said.

That’s an ironic admission coming from someone who represents an organization that lead the charge in opposing a ballot measure to eliminate the property tax last year.

But setting aside what specific tax reform is right for North Dakota, the simple truth is that the state’s leaders simply aren’t doing enough on that front.

As I noted yesterday, the legislature killed a proposal to put a moratorium on the state income tax for the next two years. While the state House did pass an income tax cut package worth $500 million, the Senate used Governor Jack Dalrymple’s recommendation for only $125 million in cuts to batter the House down to half that amount.

The $250 million in income tax cuts that did pass (I’m not counting the “property tax relief” because I don’t think increased state spending is tax relief) look paltry in light of the project surplus of $1.6 billion announced after the legislative session ended.

The hostility many North Dakota leaders feel toward leaving money in the pockets of North Dakotans will hurt the state in the long run if something doesn’t change.

North Dakota has a strong economy because of an oil boom, and high crop prices (driven high by an ethanol bubble, more on that here). South Dakota has a strong economy because they’ve limited government and kept taxes low. There’s a lesson in that for North Dakota.

The oil boom, and the crop prices, won’t last forever.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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