Say Anything Blog

Back in July of 2007 the North Dakota legislature cut the tax on newly-drilled oil wells in the state from 11.5% to 7%.  Unfortunately it was a temporary tax break and is now set to go back to the higher rate on June 30th (unless a given well hasn’t reached a 75,000 barrels-pumped threshold in which case it can be extended through the end of the year).

Industry experts are saying that this tax increase (because despite rhetoric from liberals like Senator Kent Conrad letting a tax cut expire is, in fact, a tax increase) won’t hurt oil production as oil prices are high, I’m wondering if North Dakota can really afford such a large tax increase on the industry that is driving so much economic growth in the state.

The state is running massive budget surpluses.  The state treasury just announced a record-setting balance.  So why raise taxes?  We don’t need this additional revenue, so why not make the tax cut permanent so that the oil industry can continue to flourish and drive economic growth in the state?

Would a return to the higher tax rate hurt oil production in North Dakota?  Maybe, maybe not.  But we do know that a) it won’t help oil production and b) the state doesn’t need the tax revenue.

So why let this tax break expire?