How Do You Cut A Tax For People Who Don’t Pay That Tax?

apartment-for-rent

When it comes to property tax relief, North Dakota Democrats seem intent on extending any tax relief to renters. Former gubernatorial candidate Ryan Taylor made that a key part of his property tax proposal on the campaign trail. Now legislative Democrats, including Taylor’s replacement in Democrat leadership in the state Senate, are responding to Governor Dalrymple’s property tax plans, introduced as a part of his executive budget today, saying they’d like to see renters given relief too.

“Senate Democratic leader Mac Schneider says Dalrymple’s plans for cutting school property tax bills should benefit renters as well as property owners,” reports the Associated Press.

The problem is renters don’t actually pay property tax – not directly, anyway – so how can you give them relief from a tax they aren’t a part of? Unless you just start redistributing other people’s money to them and calling it tax relief?

Make no doubt about it, renters wold benefit from property tax relief. Rent probably wouldn’t go down, but rent would undoubtedly grow less slowly. For landlords the property tax is overhead. Shrink overhead and they’re going to do more things with that money. Maybe they’ll build more housing, increasing supply and removing upward pressure on rents. Or maybe, with less expenses going out the door, they’ll be less likely to raise rents when other expenses increase.

Remember, housing is a competitive market like any other.

If Democrats are going to argue with the governor’s property tax plan, they ought to focus on the fact that it’s not actually property tax relief. Not only is the governor’s plan a massive shift in education funding from the local to the state level (I thought we were keeping it local?) but it’s actually a shift in direct tax burdens from property owners to all North Dakotans.

You could argue that Dalrymple’s plan shifts burdens from property owners to renters by shifting the burden for a big chunk of locals pending from local property owners to those who pay other state taxes like the income and sales taxes.

Not that I’m keen on giving the Democrats any tips on how to proceed, but they could make some hay out of pointing out that Dalrymple’s tax relief isn’t really relieving much in the way of tax burdens.

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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  • JW-American

    “You could argue that Dalrymple’s plan shifts burdens from property owners to renters by shifting the burden for a big chunk of locals pending from local property owners to those who pay other state taxes like the income and sales taxes.”

    or you could say that he shifted it to the oil producers and those that pay massive sales taxes to supply the needs of those that spend to produce those wells. Which is where most of that shifted taxation will come from. a large percentage of renters don’t pay much at all in the form of state taxes after you get past the portion of their rent that the building owner pays in PT. Really how much sales tax does a renter pay? how much Income tax do most renters pay? I’m not knocking renters, for many folks renting is far better financially than owning, its just you don’t see renters dropping 3-400 dollars at Menards on weekends.

    The ultimate ND Gov speech should have been, I’m going to cut 3% of the state sales taxes and let each county collect it and keep it. Its up to you voters to make sure they spend it prudently to reduce your property taxes, thanks for coming have a great day.

  • yy4u2

    That’d be so crazy to see all these people railing against property owners get booted out of their apts by the state if the property tax burden was paid directly by the tenant.

  • WOOF

    Renters pay the real estate tax,

    that’s a large reason people rent properties.
    When a tax is proposed on business
    conservatives wail and gnash their teeth.
    They rip their hair from their scalps and
    point to the iron law of

    “the tax is ultimately payed by the consumer”
    Apparently unless they’re renters.

    A great gift to Berg the Senate race loser.

    • http://sayanythingblog.com Rob

      So then, you agree with Republicans that raising taxes on corporations is really a tax on the customers?

      You’re Mekong my ping for me poodle. The democrats are wrong. We ding have to do additional tax relief for renters. They’d benefit from a reduction in property taxes.

      Who knew you were so conservative?

      • WOOF

        Believing consumers will absorb a rise in price is a fallacy. Taxes can and do eat into profit. There’s limited elasticity in pricing.

        • Thresherman

          It takes a certain mindset to claim that increased taxes are not passed on to consumers but they are to renters, as if a renter is not a consumer as well. Logic and reason do not seem to be in play here.

  • jimmypop

    “Senate Democratic leader Mac Schneider says Dalrymple’s plans for cutting school property tax bills should benefit renters as well as property owners,”

    if my cost of doing business goes down, i will pass that savings along. if i dont, one of my competitors will. then i will have to follow.

    regardless….. this should not be happening. we should be cutting income and sales taxes. there is no way for our kings to take credit for that every year though……

    • http://sayanythingblog.com Rob

      Good thing geniuses like you opposed measure 2 so we could keep it local.

      • JW-USA

        once again, if M2 wasn’t such a “pass it before you know whats in it” type of deal just like the smoking ban, now MESS, I would have voted for it. as it was written, it never had a chance..

        • http://Sayanythingblog.com The Whistler

          That’s a good point. The proponents of Measure 2 didn’t have a plan and that doomed it if it ever had a chance against the special interests.

          • http://sayanythingblog.com Rob

            The problem with the standard you guys are setting is that you can’t legislate in the constitution.

            Admittedly, the drafter’s of measure 2 should have kept it stupid. They should have just removed all references to the property tax from law, and put in place law banning the creation of such a tax. They tried to institute a funding mechanism too – in the constitution – to replace all that revenue, but they should have left that up to the legislature.

            What they were afraid of is the very criticism you guys are making. That there wasn’t enough there there.

            We still missed the boat on measure 2.

          • http://Sayanythingblog.com The Whistler

            If the proponents had had a sample budget to hand out a lot of the legitimate criticisms would have gone away. Of course the special interests like the teachers association want funding from every source possible so that they continue to get the big raises they think they need.

          • http://sayanythingblog.com Rob

            A sample budget? So they should have presumed to do the work of the legislature?

            And you really think that would have shut up the cronies at the Chamber of Commerce?

          • http://Sayanythingblog.com The Whistler

            It’s the legislature’s job to pass a budget. Anybody, even bloggers in their pj’s can write a sample budget if it would help their cause.

            As I said the special interests were not going to be happy with them being denied a chance to gouge us.

          • ellinas1

            Rob Port does not own any pj’s.

          • http://Sayanythingblog.com The Whistler

            Totally Too Much Information.

          • ellinas1

            You said: “…, even bloggers in their pj’s can write a sample budget…”
            Rob Port did not write a simple sample budget.
            Therefore the conclusion is that Rob Port does not own pj’s.

          • http://sayanythingblog.com Rob

            I don’t think a sample budget would have helped much.

            I do actually think the Measure 2 people would have been better off not trying to enshrine a replacement funding model in the constitution.

            The measure should have a) banned property taxes and b) made it clear that didn’t absolve the state of spending obligations to the local level.

            Beyond that, let the policymakers figure it out.

      • jimmypop

        youre a great conservative….. ha!

        anyway, once again the same question…… as a fargo resident please let me know how i can vote out Schnieder if i dont like what he does with my taxes. i can vote out EVERY SINGLE LOCAL OFFICE if i think my taxes are too high or they are spending in the wrong places.

        • http://sayanythingblog.com Rob

          And now what are we getting, Jimmy? State funding of education. Just like what Measure 2 would have done.

          • jimmypop

            what about EVERYTHING else? EVERYTHING. All those little things from hockey rinks to mowing the lawn of the county highway department? you advocated turning ALL our local folks into beggars for this funds. your idea should have failed by FAR more. the only reason it did so well is because many people (like me) think local government over taxes us because we build stupid things like gyms when we have a gym in literally every strip mall city wide.

          • http://sayanythingblog.com Rob

            But that’s where this is heading anyway. We’ve set the precedent. Local governments overspend and now the state basis them out.

            Some of us didn’t want to open this can of worms back in 2007 when Hoeven initiated it.

          • jimmypop

            serious question; who, specifically, is going to the state to ask for money because they overspent?

  • http://Sayanythingblog.com The Whistler

    Property taxes are too high. We all know that. So there is a lot of pressure on the legislature to lower property taxes so they agree.

    But then the buttheads want to extend the benefits to people that aren’t paying the tax. They haven’t been getting screwed but somehow they should get the relief based upon the fact that the property taxes have been.

    • http://sayanythingblog.com Rob

      That’s the part that really gets me.

      Let’s cut income taxes! And also send a tax to all the people who don’t pay income taxes!

      • two_amber_lamps

        Liberal logic 101….

        Collect tax overage so we can put into place a bureaucracy who’s function is to return/redistribute said tax to include those who never paid tax to begin with, while siphoning off a portion of that tax to facilitate the bureaucratic self-licking ice cream cone.

        http://www.mileanhour.com/files/2012/11/Super-Derp.jpg

  • headward

    Maybe the renters should shoulder a burdon of the risk homeowners have. We pay out of pocket for the property tax. The renter bitch and moan when their rent jumps but they don’t mention how the cost of doing business went up. It will be rocket and feathers with these prices and we shouldn’t be awarding renters any piece of this pie. I should get a refund on the estate tax as well although I’ve never paid it people have had it reduced therefore I should get some of that money. /liblogic.

  • LibertyFargo

    Oh… I’m sorry. Did you say executive budget? I thought you said excessive budget. Silly me.

    • http://sayanythingblog.com Rob

      Same thing. :-)

  • 11B40

    Greetings:

    As I’m still serving my deportation to California, a state with serious acumen in establishing and collecting myriad forms of taxation, please let me pass along this bit of tid. The once Golden State has a renter’s deduction on its income tax that’s supposed to do something or other and let the few remaining taxpayers think that someone somewhere in government is concerned more about them than their money or wealth.

    As to whether renter’s pay property taxes, indirectly is direct enough for me and, perhaps, even more so for my checking account.

  • John Wayne-American

    Lets see, a renter looks at an apartment and decides, “ok for 700 dollars per month I get heat, water, garbage, cable TV snow removal, and of course Property Taxes paid for; I can afford to live there… ”

    A homeowner in 1978 looks to buy a house for 50,000 dollars and says for $363 / month and $35 / month for taxes I can afford to live there and raise my family…

    30 years later, that home is appraised at $190,000 and the taxes are $3800 per year. and the couple who thought their house was paid for, are now renters to the City, County. school, water & park district,

    I think there is a very discernible difference between renting and owning property. Renters have a set value on which to make a consumer choice, until the increase in rent notice comes out at which point they make the decision to move or pay the increase.

    Homeowners are locked into a 15- 30 year, possibly lifetime or generations of equity invested only to be at the whim of appraiser or mil levy increase.

    That my friends is the difference between renting and owning; they might both cost similar families, similar amounts of per month out of pocket, but the implications of those investments are inherently worlds apart.

    • http://sayanythingblog.com Rob

      Well said.

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