Interview: ND State Rep. Proposes Two Year Suspension Of The State Income Tax

sclouser

If there are two to priorities for the legislature, in the eyes of the general public, it is addressing needs created by the state’s fast-growing economy and population and using some of the state’s revenue windfall for tax relief.

To that latter point, there are a number of proposals on the table for tax relief. Most, including Governor Dalrymple’s high-profile proposal for a state take over of most local school funding, target property taxes, but Minot Rep. Scott Louser wants to address income taxes.

Louser told me in an interview that he’d like to suspend collection of personal income taxes for two years – the 2014 to 2015 biennium – as a sort of “toe in the water” for an eventual elimination of the tax.

This would not apply to the corporate income tax.

[youtube http://www.youtube.com/watch?v=NJisG81nn30&w=560&h=315]

It’s worth noting that other states, not enjoying anything near North Dakota’s tax revenue windfall, are looking at eliminating income taxes.

Determining what this might cost in revenues isn’t easy. It’s a bit like a game of pin the tail on the donkey. According to the most recent numbers from the state’s Office of Management and Budget, from the beginning of the biennium through November of 2012 the state had collected $592,345,912 in personal income tax revenues, which exceeded projections by a whopping 61%. Based on that number, personal income tax revenues will almost certainly meet or exceed $1 billion by the time the biennium ends in June of this year.

As of July of 2011 the OMB was projecting that income taxes would make up 15.8% of general fund revenues, though again that’s based on projections that have far understated revenues, though it should be noted that other tax revenue streams have far exceeded revenues as well, so that percentage may stay about the same.

Put simply, this would be a very big tax cut, which may actually work against it. Our legislature, on the whole, has proven reticent to embrace ideas that give back large chunks of tax revenues to the taxpayers, preferring instead the sort of “property tax relief” they’ve put in place in the past which consists of the state transferring large chunks of revenues to other levels of government.

Which, of course, isn’t really tax relief at all.

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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  • RCND

    The chief argument against this: “Because the surplus will only be $this big rather than $that big”.

    No matter if it is ultimately right or wrong, it is a debate worth having

    • http://sayanythingblog.com Rob

      I think a nice component is that it’s temporary. I think some people get scared about radical, permanent changes to the tax code.

      This is a fairly radical change, but it’s temporary. If it isn’t working out, we can fix it in the next biennium. But if it is working out, and i think it would, we can make it permanent.

      • RCND

        My feeling is it will be negotiated down to a temporary tax rate reduction vs elimination. But let the debate begin. The time and place is now.

      • kevindf

        “I think some people get scared about radical, permanent changes to the tax code.” Those people live off of taxes and subsidies and have an irrational fear of losing them. Think Lloyd Omdahl.

  • jimmypop

    its about f’ing time. and it should be forever, but the state would not be able to tell us how great there are every two years though…

    i bet it dies quickly…..

  • Game

    Even if this passes, KevenF will still say that his state taxes is higher than his federal taxes. #justsaying

    • http://sayanythingblog.com Rob

      Hahaha…

    • kevindf

      You don’t know that. I’ll bet that greedy airhead, Kathy Hawken, votes against this.

      • Tim

        We sure do know that Kevin because you continue to use that lie but offer no proof – which can only mean that you are getting credits on the federal side which aren’t allowed on the state side, but you won’t tell us anymore. So I can only guess that you as a fiscal conservative as you make yourself out to be are eating at the federal government trough and getting credits/breaks there which means that like a liberal you want others to pay taxes but you dont’ think you have to. Prove me wrong, by providing your tax return for analysis.

        • http://nofreelunch.areavoices.com/ Kevin Flanagan

          My state income taxes were zero in 2007. Last year they were five times what my federal income taxes were. Cory Fong called me last March and was forced to admit it.
          When they entwined property taxes with income taxes, my property taxes went down $52; whoopee.

  • Hal109

    The voters have spoken. No, to property tax elimination. Yes, to big socialist Heitkamp. The people’s will is to increase taxes and grow government. Dalrymple has heard the voice of the people and his budget request reflects it. Get on-board, get your freebee before the house of cards comes down.

  • nimrod

    It’s refreshing to hear an occasional good idea come from Bismarck. This time of year we are usually bombarded with stupid bills. The only 2 good proposals I’ve heard so far have come from Minot’s Scott Louser, and Roscoe Streyle.

  • Yogibare

    Perhaps we need to have the debate on reduction of taxes which may take the form of property tax reduction or income tax reduction.
    Which ever, there is money in the State coffers to look at some reduction.
    However, always a however, tax relief ideally should take the form of relief for people who live here as residents, not absentees who own property and live elsewhere.
    In short, I do not advocate mailing tax relief checks to absentees who have PO Boxes in Arizona or Florida, etc.

    Secondly: if an income tax reduction is desired, make it a reduction and not elimination of a State tax. Some States, like South Dakota, have other taxes that make up for the lack of a State income tax. There are inequities in sales taxes, as well.

    • http://nofreelunch.areavoices.com/ Kevin Flanagan

      The “surplus” (over taxation of the private sector) will wind up where it always does; in the greedy pockets of those who spend their lives on the state payroll until they collect their fat pension.

  • http://ndgoon.blogspot.com Goon

    That would be nice to have that. Not state income taxes for two years. The liberals and the big spending RINO would never agree to that.

  • http://randysroundtable.blogspot.com/ Randy G

    A state like North Dakota that has a surplus in the billions should not even have a state income tax. Surplus = theft. They took too much!

    • awfulorv

      You’re thoughts might be extended further. Theft from the people=surplus——–Theft from the grandchildren=deficits———-honorable government caretakers=balanced budgets

    • Roy_Bean

      Yes, they took too much, but where did they take it from? We as a state are dangerously close to falling into a tax-the-rich mentality when it comes to the Bakken. The first tax that should be reduced is the oil extraction tax. That’s where the surplus is coming from.

  • Lynn Bergman

    Frederick Bastiat explained the two things necessary for legislation to be within the “rule of law”. the legislation must be PERMANENT and must not favor one group over another. “Temporary” legislation is ill-conceived and reveals untrustworhtyness and gimickery. Beware the self-serving politician who proposed temporary legislation!

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