Permanent cuts to corporate taxes, dramatic reductions in the oil extraction tax proposed by GOP threaten long-term relief
(BISMARCK, N.D.) – As crossover nears, Dem-NPL legislators today called upon members of the GOP majority to refocus tax relief efforts this session on providing immediate and lasting property tax relief to North Dakota residents. The legislators’ action comes on the heels of a vote by the senate GOP majority last week to double proposed corporate tax cuts from the level identified in the executive budget.
“While there is bipartisan agreement on the need to cut the taxes, there is sharp disagreement on which tax cuts take priority,” Senate Democratic Leader Mac Schneider said. “Our approach to cutting taxes is simple: Provide meaningful, sustainable property tax cuts to North Dakotans first. I’m concerned the majority is taking a shotgun approach to cutting taxes when the focus should be on providing property tax relief, both immediately and in the long run, for residents of this state.”
Last Thursday, the GOP senate majority approved amendments to SB 2156, which would provide $50 million in permanent cuts to the corporate income tax, up from the $25 million proposed by Governor Jack Dalrymple during his budget address. As amended, the bill would also double the proposed reduction to the personal income tax in North Dakota from $100 million to $200 million.
The Dem-NPL legislators questioned the wisdom of sharp, permanent reductions in the corporate income tax. According to the non-partisan Legislative Council (memo attached), corporations headquartered outside of North Dakota paid 82% of the corporate income tax statewide during the last tax year for which data is available. Additionally, the Legislative Council determined that the estimated $25 million in permanent corporate income tax cuts approved by the Legislature in 2011 actually meant a $59 million dollar reduction, relief which could have gone towards deeper property tax cuts.
Senator Jim Dotzenrod (D-Wyndmere), the Dem-NPL’s senior member of the Finance and Taxation Committee, said he would work to refocus the debate on cutting property taxes next week as SB 2156 is debated on the floor.
“We should be providing tax relief to people who own homes in North Dakota,” Dotzenrod noted. “There isn’t much sense in offering up tax cuts to corporations that largely aren’t even asking for them.
House Dem-NPL Leader Kenton Onstad (D-Parshall) raised concerns about the effect permanent cuts to corporate and personal income taxes would have on the ability to provide property tax relief in the long-term when combined with the dramatic reduction to the oil extraction tax proposed by the GOP in SB 2336.
“Permanent reductions in corporate income tax and oil extraction tax threaten our ability to fund property tax relief in the future,” Onstad said. “If oil revenue levels off or if our economy slows down and the Legislature no longer has the ability to fund property tax relief, it’s North Dakota homeowners who will be left holding the bag.”
The majority’s emphasis on cuts to the corporate income tax and oil extraction tax contrast sharply with Dem-NPL efforts to cut taxes for people who call North Dakota home. Property tax relief proposals advanced by Dem-NPL legislators this session include property tax relief for those with a primary residence in North Dakota (SB 2290 & HB 1044) and property tax relief for renters (HB 1221 & SB 2290). In addition to this focus on property tax relief as a priority, Dem-NPL legislators have also advanced legislation to exempt clothing from the sales tax and provide tax relief to non-profits.
“By placing Measure 2 on the ballot last June, the people sent a clear message that we need to meaningfully cut property taxes,” said Representative Jessica Haak (D-Jamestown).”I fear the majority has forgotten this message. We need to provide real property tax relief or people’s justified frustrations with rising property taxes will lead to a resurrection of Measure 2.”