North Dakota voters approved the creation of a Legacy Fund into which oil tax revenues will be deposited (the first deposit happened earlier this month). Eventually the legislature will be able to spend out of the fund, but only certain amounts and only with super-majority approval in both houses.
The creation of this fund, though it was backed by Republicans and Democrats alike, was a mistake that’s already being used as an excuse to oppose tax relief. The fund will like up hundreds of millions of tax dollars in the government, and though spending from the fund requires a 2/3′s majority it’s worth noting that just about every spending bill passed in the state legislature gets a super majority.
Now there’s a debate over what to do with tax dollars deposited in the fund. Some legislators are resisting pushes to invest the balance of the fund in the stock market, but in the Grand Forks Herald today Tom Dennis argues for investment noting what a bounty the proceeds could be for the state.
I’ve nothing against investing in the stock market, obviously, and I’m not surprised that Dennis would think fondly of enriching the government so that the government can do more stuff but I think everyone supportive of this fund is missing the point.
These are tax dollars taken out of the private sector. Tax dollars the state government has no need of. Rather than using them as some sort of an investment slush fund for the state, they ought to be given back to those who paid them. Or used to offset other taxes.
Regardless, we shouldn’t be locking wealth away in government to be played with by government investment boards. If the government doesn’t need the money, then give it back to the taxpayers.
Let the citizens invest or spend their own money.