If You Want People To Come To North Dakota, Eliminate The Income Tax

North Dakota has a labor shortage problem.

On one hand, we can tout the state’s rock-bottom low unemployment rate – just 2.6 percent in January according to the latest numbers – as evidence of a booming economy. On the other hand, another report from North Dakota Job Service indicates that there is less than one unemployed person per job opening in the state, and that’s hardly a new development. The ratio of unemployed workers to job openings has been less than one for roughly a year now.

That’s not good. In order to keep growing, in order to build out needed infrastructure, the state needs more workers. Which is the goal of a new effort headed by Lt. Governor Drew Wrigley and the North Dakota Economic Development Foundation which hopes to bring more people to the state with an $800,000 marketing campaign.

Feel free to roll your eyes.

The idea that an advertising campaign is going to draw any significant number of new citizens and workers to the state is a little absurd. If we really want to attract workers, North Dakota needs to offer a better economic deal.

Wages are rising. North Dakota’s personal income growth is among the best in the nation. That helps. The weather doesn’t help, nor does the elevated cost of living (particularly in the western part of the state) brought on by rapid population growth and a housing crunch. There’s not much we can do about the weather, and the housing issues are going to have to work themselves out as supply catches up to demand.

But there is something the state of North Dakota can do to help: Eliminate the income tax.

There was a proposal to do just that before the state legislature last year. A bill introduced by Rep. Scott Louser (R-Minot) would have put a two-year moratorium on collecting the personal income tax, with an eye toward eliminating the tax after that. Unfortunately the bill was killed in the House, and even more than $500 million income tax reductions passed by the House was watered down by the Senate which was more in line with Governor Jack Dalrymple’s much more modest proposal for relief.

Which sort of illustrates the problem. The Dalrymple administration spends money on a marketing campaign to attract workers to the state, but sandbags income tax relief?

It’s not like the state needs the money. After successive legislative sessions in which significant income tax relief was passed, state revenues are still running nearly 20 percent above where they were last biennium.

So what’s the hold up? Taxes, particularly the income tax, are a major factor in interstate moves. So why not position North Dakota as an attractive place to move, financially? Not just so that we can get more workers in the state during the current oil boom, but so that North Dakota is an attractive place to live and work permanently.

Eliminating the income tax – at the very least the personal income tax, if not the corporate tax – would do far more to attract new citizens to the state than any marketing.