Why In The World Is The State Of North Dakota Raising Taxes?

The State of North Dakota’s financial situation is the envy of the nation. According to the most recent revenue report from the Office of Management and Budget, total state revenues biennium to date are running 64.7% above last biennium.

To put that in numbers, the state has collected $1.6 billion more in taxes so far in this biennium as compared to last biennium.

So why in the world would a state so awash in cash raise taxes? Because big oil or something, it seems.

After an oil tax restructuring package which would have raised taxes in the short term by eliminating some loopholes in exchange for lower rates in the long term was rejected by the House, the Senate has passed another bill which raises taxes on an industry that is already paying billions worth of taxes in the state.

BISMARCK, N.D. (GPN) – A bill to reduce taxes on North Dakota’s oil industry has turned into a short-term tax increase.

The North Dakota Senate unanimously approved the measure Friday. It now goes to the state House for its review.

The bill closes some tax loopholes that allow big-producing oil wells to pay the same tax rates as other wells that produce only a few dozen barrels each day. Those are called “stripper” wells.

The measure repeals a tax break for newly drilled oil wells on private land within the Fort Berthold Indian Reservation.

North Dakota’s Tax Department estimates the industry will pay an additional $62 million in taxes over the next two years because of the bill.

The state’s oil taxes are arcane. There’s nearly a dozen exemptions and triggers some tied to oil prices, and so eliminating some of those exemptions only makes sense. A simpler tax code is better for both the state, which must administrate it, and the oil industry, which must pay it.

But any restructuring should at the very least be done in a revenue-neutral way. Because the state has no business raising revenues in such a time of revenue excess.

Yet, that seems to be the attitude many of our leaders have. They seem to think that revenues should be maximized, rather than based on what the government actually needs. Even accounting for infrastructure and other reasonable needs, the state of North Dakota has far more revenue than it needs.

Sadly, the oil industry won’t be the only folks getting a taste of that sorry attitude. Income tax cuts for corporations and individuals passed by the House are going to get watered down by the Senate too.