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Grande: Eliminating state income taxes deserves a second look

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Bette Grande
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Eliminating North Dakota’s income tax, now that is a legacy. It is hard to imagine a better use of a portion of the earnings on North Dakota’s Legacy Fund than a permanent income tax holiday. 

I was very happy to see that the proposal to reduce and eliminate income tax in North Dakota given a second life in the North Dakota House of Representatives. I witnessed the resurrection of a lot of proposals in my time in Bismarck, most should have stayed in the ground, but every once in a while, there was a good bill that just needed a second look. Eliminating state income taxes deserves a second look.

Abolishing the income tax through a gradual process will be beneficial to the people of North Dakota and those doing business here. Letting taxpayers keep more of their money in their own pockets is never a bad idea. And, let’s face it, the income tax laws, even at the state level, are a playground for special interests.

In the 2019 legislative session a total of 37 income tax-related bills were introduced. Many aimed at giving a credit to taxpayers in a certain group or to incentivize desired behavior. In the 2015 session there were 55 income tax related bills introduced. Those of us who do not want the government picking winners and losers can agree that eliminating income taxes is a great start.

The resurrected proposal is based on House Bill 1530 sponsored by Rep. Craig Headland, R-Montpelier, and it simply pushes back the start of the elimination process to 2022. Headland’s bill easily passed the House earlier this spring, but was defeated in the Senate. Opponents of the proposal stress the need for a “three-legged stool” for state revenue. Understandable, it is wise to have multiple sources of revenue to fund state priorities, but this proposal does not change that. It simply replaces the income tax leg with another source of income.

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It is also important to remember that North Dakota does not actually have a “three-legged stool”, it has a “two-legged stool” (if there is such a thing) of income tax and sales tax. The third leg, property tax, is not a source of revenue to the state. And, as we are all painfully aware, lawmakers in Bismarck do not have the ability to fix local property tax issues.

Property tax buydowns were not sustainable. And, as the state has taken on the cost of county social services and K-12 education, did your property tax go down?

Property taxes are an issue that must be addressed, but it is a problem that cannot be fixed from Bismarck. Further attempts to lower property taxes is a poor excuse to oppose the gradual elimination of the state income tax. You want to help the taxpayers back home? Look at what you do control – income taxes.

Some seem to feel that eliminating income taxes is bad policy because we might need that revenue one day. But the taxpayers earned that income and they could use it today.

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