Democratic senator suggests property tax relief plan for North Dakota taxpayers
Sen. Tracy Potter, D-Bismarck, said his plan addresses taxpayers' major complaint, the burden of the property tax. Individual state income taxes are of minor concern to most taxpapyers, he said.
BISMARCK — A Democratic senator is floating a 10% property tax reduction that he touts as a preferable alternative to a flat-tax proposal pushed by Gov. Doug Burgum that Republicans say will eliminate state income taxes for almost 60% of filers.
Sen. Tracy Potter, D-Bismarck, said his property tax relief plan isn’t a reaction to the GOP plan unveiled last week but highlights the different governing philosophies of the two parties.
“I’ve knocked on nearly 2,000 doors this summer and talked with 500 or more constituents,” Potter said. “Not one mentioned income tax. The No. 1 topic is property tax. The governor is either tone deaf or only listens to ideologues and rich people.”
Last week, Burgum and other Republicans outlined a plan for a flat 1.5% individual state income tax relief plan that its authors said would eliminate the state income tax for 57% of taxpayers and would rank as the nation’s lowest flat-tax rate.
The governor and other Republicans, including Tax Commissioner Brian Kroshus, said their plan would eliminate the lowest individual income tax bracket and would be friendly for working-class families. They said their tax plan would improve the state’s business climate and help attract workers.
But Potter said his Democratic-NPL alternative tax-relief plan is more in step with homeowners’ expressed wishes to address the more burdensome property tax. The property tax credit would be up to $1,000 for married couples filing jointly, or up to $500 for single homeowners, and apply only to a primary residence. The plan’s estimated cost is $120 million.
The GOP flat-tax plan, estimated to cost $250 million, would cut income taxes almost in half for millionaires, but does “nothing or next to nothing for struggling homeowners facing annual increases in the property tax burden,” since local governments rely almost entirely on property taxes, Potter said.
Under the GOP flat-tax proposal, the top individual income tax bracket would drop to 1.5% from 2.9%.
For most taxpayers, the state income tax is a “modest, modest amount,” Potter said. “There is no hue and cry about the income tax.”
Potter said he has a bill draft for his proposal which he presented to interim legislative committees and was drafted before the GOP announced its plan.
Because of an interpretation of the state Constitution’s gift clause, which prohibits the state from giving “something for nothing,” some lower-income households got little or nothing from the $700 tax credit passed last year.
By making his property tax relief a credit on taxpayers’ state income taxes, that problem is solved, providing relief to property owners, such as retirees, who have little income but own property, Potter said.
The GOP income tax relief plan would decrease Potter’s income taxes by about $100, he estimated, but his property tax credit would give him a rebate of $290, he said.
“It is a way to provide direct relief from the state’s tremendous surplus,” he said. “To me, that’s a real win.”
The proposal is a simplified version of an earlier idea that legislators adopted around 2007, Potter said.
Sen. Tim Mathern, D-Fargo, agreed that the property tax burden is of greater concern to taxpayers than the state income tax.
“When I go door to door, the complaints are about property tax, not about income tax,” Mathern said. “My main concern is the truth — Burgum's plan is being sold as helping the poor, and it is giving money to the rich in actual dollars.”
Mike Nowatzi, a spokesman for Burgum, said the governor's tax relief plan would benefit more taxpayers.
"The Relief for All tax plan provides meaningful, permanent relief for a much broader portion of the population, while Sen. Potter’s plan does absolutely nothing for renters –- even while he points out that it's better for his own bottom line."
He added: "Sen. Potter’s plan also ignores the fact that property taxes are set at the local level, and dumping state tax revenue on a property tax problem that varies widely from city to city will do nothing to reduce the cost of local government and stop cities, counties, school boards and park districts from increasing their levies and homeowners’ property values, driving property taxes even higher."