Letter: It's time for North Dakota to eliminate property taxes
Becker writes, "If we combine what you are paying in property taxes to what the state is paying to buy down your property taxes, it comes to about 2% of the home value. That means our de facto property tax rate is now second highest in the nation! Subsidizing (buying down) property taxes does not work. It never has, and it never will."
Roscoe Streyle, running for House in District 3 in Minot, has a plan to reduce property taxes by 50% for two years. Although a very smart campaign strategy, this same buy-down plan has already been done in North Dakota, and it has failed miserably. Even the legislative proponents at the time have now declared it a failure.
Legislators are quick to point out that property taxes are the No. 1 complaint of their constituents. Addressing property tax, therefore, should be a priority during a campaign, and the promises should be followed through with action during the legislative session. The focus must be on something that gives true, long-lasting relief to the people of North Dakota.
A state buy-down doesn’t fit that bill. How do we know the buy-down approach is a failure? Consider that the Legislature has already been buying down your property taxes. The amount of property tax the state is paying on your behalf is proudly displayed in your county tax statement, labeled Legislative Tax Relief.
Do you think your property taxes went down substantially over the last few years? Me neither. A few legislators will tell us that although property taxes increased, they would be even higher if the buy-downs hadn’t occurred. The numbers tell a different story.
Consider the Tax Foundation’s annual report showing that the average property tax in North Dakota in 2012 (before buy-downs) was 1.14% of the home’s true value, ranking 18th highest in the nation. The value of the state buy-down is a little over 0.6% of the home’s value, so if the plan worked, our tax would now be about 0.51%, which would put North Dakota in the wonderful position of third lowest property tax in the nation. That’s not what happened.
The Tax Foundation’s most recent report shows that North Dakota’s property tax rate was 0.95% in 2021, 23rd highest in the nation. It didn’t work because when the state buys down (subsidizes) property taxes, the cities have more “elbow room” to raise them. That’s exactly what happened.
If we combine what you are paying in property taxes to what the state is paying to buy down your property taxes, it comes to about 2% of the home value. That means our de facto property tax rate is now second highest in the nation! Subsidizing (buying down) property taxes does not work. It never has, and it never will.
Also, it warrants being reminded; it is your tax dollars going to the state, which are then being used to buy down your property taxes. The net effect of buy-downs is that you are paying more in overall taxes than without buy-downs.
Some might say that it isn’t your sales tax or income tax that is paying for the buy-down, rather it is oil tax. That is dishonest. The Legislature can move money around however they want. The amount of oil tax that is paying for buy-downs could instead be used to fund what your sales tax or income tax is currently funding. In other words, the buy-down scheme prevents true tax reforms and reductions from taking place.
Another concern with the 50% scheme is that the alleged benefit is limited strictly to homeowners. Actually eliminating the property tax would benefit everyone. The No. 1 expense for owners of apartments and commercial buildings is property tax, which is passed on to the renters. Eliminate the property tax, and all renters will reap the benefit, just as homeowners will.
North Dakota is in the enviable position of being the most likely of all the states to abolish the property tax. The best next step is to ask the Legislature to pass a bill in the next session to allow the voters to decide whether they want to eliminate property tax.
Rep. Rick Becker, R-Bismarck, serves in North Dakota's House of Representatives.
This letter does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.