NORTH DAKOTA (KXNET) — “Bottom line our state is doing extremely well,” said Governor Doug Burgum during the press conference where the Office of the Governor and Office of the State Tax Commissioner jointly announced their tax relief plan that would replace the state’s individual income tax rates with a single, lower flat tax.
The state’s oil collections through July were $2.8 billion. That’s 44% higher than forecasted.
“It’s important that those tax dollars go back to the people who created that prosperity, our citizens. So now is the right time,” said Burgum.
Last week, we reported the “Relief for All” tax plan would replace the state’s individual income tax rate with a single, lower flat tax.
The initiative for the proposed flat tax would save North Dakota taxpayers an estimated $250 million every year and eliminate the individual income tax burden altogether for nearly 60% of the state’s taxpayers.
This comes at a time when oil and gas tax revenue is so high that it would offset the revenue lost by cutting income taxes.
North Dakota Watchdog Network’s Dustin Gawrylow says he’s surprised State Republican leadership is coming out so strongly on this
“It is refreshing that instead of the usual grandiose spending proposals, that they are coming out with a general tax spending reform,” said North Dakota Watchdog Network’s Founder and President Dustin Gawrylow.
Gawrylow has been working for more than a decade with other politicos, including former Governor Ed Schafer, to bring down the state income tax.
“Income tax is a tax on productivity, it’s a tax on labor. That’s not necessarily the most fair way to do it, in my opinion,” explained Gawrylow.
Gawrylow is in favor of taxing consumption rather than income.
“We want to promote the idea that North Dakota is a place that we’re not going to punish you for making more money. We’re going to tax you when you spend your money,” Gawrylow said.
North Dakota Democratic-NPL Chairman Patrick Hart says income tax reduction doesn’t actually help the working class, overall.
“Well, I think flat taxes by default are fairly regressive,” said Hart. “I understand if people are making about under $50,000 a year, they’re going to save about $750. However, people making around $1 million a year, they’re going to save 12,000, so obviously, this is tilted to give the saving to the people at the top.
Hart also believes the tax plan is too dependent on oil and gas prices.
“I know the oil extraction tax is up based on the current price, but what we learned back then, our budget on the state level is too dependent on commodities, and just because commodities are up right now, doesn’t necessarily mean we should lower taxes. We should wait and see what happens in Ukraine. We should wait and see what happens in the oil market,” explained Hart.
Gawrylow says lowering the income tax will make North Dakota more attractive for startup companies, which he says will in turn diversify the state’s economic base.
“Because LLCs are taxed under the personal income tax rates, they would benefit from this plan as well, significantly, so an LLC, or North Dakota would become a very friendly place to launch an LLC,” Gawrylow said.
The “Relief For All” Tax Plan will be a hot topic in the upcoming legislative session.
If passed, lawmakers are expected to discuss dedicating legacy dollars to keeping income tax low.