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Port: Republican 'flat tax' proposal is not 'just another giveaway to the wealthy'

The mantra may be good politics — the usual partisan drones will pick it up and repeat it without bothering to examine or think about the proposal itself — but it's not honest.

Gov. Doug Burgum announces the Relief for All income tax relief proposal on Wednesday, Aug. 24, 2022, at the North Dakota Capitol in Bismarck, joined by (from left) Rep. Glenn Bosch, Rep. Jason Dockter, House Finance and Taxation Committee chairman Rep. Craig Headland, Lt. Gov. Brent Sanford, State Tax Commissioner Brian Kroshus, Sen. Jordan Kannianen and Sen. Scott Meyer.
Gov. Doug Burgum announces the Relief for All income tax relief proposal on Wednesday, Aug. 24, 2022, at the North Dakota Capitol in Bismarck, joined by (from left) Rep. Glenn Bosch, Rep. Jason Dockter, House Finance and Taxation Committee chairman Rep. Craig Headland, Lt. Gov. Brent Sanford, State Tax Commissioner Brian Kroshus, Sen. Jordan Kannianen and Sen. Scott Meyer.
Photo courtesy of Gov. Doug Burgum's office
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MINOT, N.D. — So much of our political dialogue is just rote, knee-jerk talking points driven by partisanship.

Republicans always call Democratic budgets "tax and spend" plans. Democrats call any sort of tax reform "tax cuts for the wealthy." These slogans are deployed regardless of the facts of a proposal.

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As an example of the latter, consider the recent "flat tax" proposal announced by Gov. Doug Burgum and a group of Republican lawmakers yesterday. The response Democratic-NPL lawmakers was about what you'd expect.

"Dem-NPL Lawmakers dismiss Burgum Tax Proposal as 'Just another giveaway to the wealthy,'" read the headline for their news release responding to the announcement of the plan. The quote in the headline comes from Rep. Zach Ista, a Grand Forks Democrat.

“I’ll work with anyone to lower taxes for hard-working North Dakotans who need it most. But this proposal is just another giveaway to the wealthy," he said.

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That's just not true.

I'm not sure which proposal Ista is looking at, but it couldn't have been the one Republicans announced yesterday.

Talking about tax rates as numbers can be a bit confusing, so let's get visual. Here are two charts breaking down North Dakota's current tax brackets by adjusted gross income level for both single and married filers.

The rate brackets are the same for individuals and married couples, but the income levels at which they kick in are higher for married couples. Under this taxing regime, everyone pays at least 1.1% in income tax (before deductions, credits, etc.).

What Burgum, et. al., are proposing is an elimination of the income tax for all single filers making $54,725 or less in adjusted gross income, and all married filers making $95,600 or less.

Everyone making above those levels pays a flat 1.5% income tax.

According to Tax Commissioner Brian Kroshus, roughly 60% of North Dakotans would end up paying no income tax at all under this proposal. The remaining 40% would pay a flat rate that represents a 26% to 48% reduction from their previous rates.

The proponents are estimating that these reductions represent a $250 million tax cut from current tax levels for all taxpayers annually.

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As you can see, it not only lowers the rates for every North Dakotan at every income level, but it makes the tax brackets much simpler:

There are valid concerns to raise about this proposal.

Would this leave in place the compliance costs of the income tax — the time and money it takes to document and report your income — for those paying no rate?

How will the state handle the roughly $500 million in lost revenue for the budgeting biennium?

Does this plan put us at risk of making our state too reliant on sales and oil tax revenues, each of which can be extremely volatile, as we've learned from past budget cycles?

Those questions are going to be part of the debate going forward.

What shouldn't be part of the debate is the idea that this plan represents "just another giveaway to the wealthy," because that's not true.

The mantra may be good politics — the usual partisan drones will pick it up and repeat it without bothering to examine or think about the proposal itself — but it's not honest. Shame on those who will pretend it is.

Opinion by Rob Port
Rob Port is a news reporter, columnist, and podcast host for the Forum News Service. He has an extensive background in investigations and public records. He has covered political events in North Dakota and the upper Midwest for two decades. Reach him at rport@forumcomm.com. Click here to subscribe to his Plain Talk podcast.
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