For North Dakotan Property Owners, Measure 2 Could Mean Hundreds Of Dollars In Tax Relief Per Month
This is an interesting comment from AARP spokesman Josh Askvig, who bemoans the potential loss of $812 million in property tax revenues if voters approve Measure 2 on the June ballot.
The AARP is a part of the coalition of unions, big government and big business special interests calling themselves Keep It Local ND, which is opposing Measure 2.
AARP of North Dakota is also opposed. Spokesman Josh Askvig says eliminating the property tax will likely mean other taxes will have to be raised.
“The North Dakota Tax Department said if we just replaced the $812 million annually, you’d probably have to double the sales tax, if you did just sales tax. You would probably have to triple the income tax. And so, is it really going to be tax relief, or a tax shift?”
The problem with this analysis is that it’s static. It assumes that if the property tax goes away, the revenues will just disappear. But that’s not accurate. That $812 million per year is going to stay in the pockets of North Dakota property owners who, in turn, are going to do lots of other things with it. They’ll spend it, or invest in businesses, or remodel their homes, etc., etc.
Obviously, all of those activities are going to increase revenues from other tax sources. Like the sales tax and the income tax. If we believe the Measure 2 opponents, the money will just evaporate into thin air. But that’s not how economies actually work. Tax cuts have a stimulus effect.
How much of a stimulus effect? It depends on the property, and where the property resides, but let’s use Stark County (Dickinson, ND) as an example. Average home sale price in March of 2012 in Stark County was $232,323. The average tax rate applied to residential property in Stark County is 0.0142 annually.
If the property tax were eliminated, that would mean a $274.92 tax reduction per month for residential property owners in Dickinson.
That’s going to mean a lot more money for property owners to spend in Stark County which, in turn, will mean a lot more sales tax revenue, etc., etc.
Are North Dakotans really going to say no to a tax cut worth hundreds of dollars per month to their bottom line? I know I could use another couple of hundred dollars per month in my family budget.Tags: aarp, josh askvig, measure 2, North Dakota News, property taxes