There Is No Version of Reality in Which a $600 Million Tax Hike Is Really a Tax Cut


Senate Minority Leader, Mac Schneider, and Assistant House Minority Leader, Corey Mock, welcome their constituents before the State of The State Address on Tuesday, Jan 6, 2015, at the State Capitol in Bismarck, N.D. (Logan Werlinger/Grand Forks Herald)

Democrats really, really want “Republicans cut taxes for big oil” to be a viable part of their political platform heading into the 2018 election cycle.

The big obstacle they face is that it isn’t a true statement.

What they’re hoping is that if they just keep repeating the claim, over and over again, the public will perceive it as true.

Which is why it needs to be shot down every time it’s brought up. Which is why, in turn, I keep writing about it. Because that’s my job. To point out when politicians say untruthful things.

Former Senator Mac Schneider says, in this letter to the editor, that I wouldn’t have to keep bringing the issue up “if the decision to permanently cut the oil extraction tax was in the best interests of North Dakota.” As if I’m the one initiating this.

I’m not. I am engaging in rebuttal of a demonstrably untrue thing Democrats in North Dakota keep saying.

During the 2015 session a Republican majority, along with a couple of Democratic defectors, voted to lower combined oil extraction/production tax rate from 11.5 percent to 10 percent and eliminate a massive low-price trigger exemption from the extraction tax.

The combined result of these policies has been roughly $600 million in additional tax revenues for the State of North Dakota from January 2016, when the policy was implemented, through present. That’s according to the Office of the State Tax Commissioner. This graphic shows, through February, a comparison of the revenues collected under the new tax code versus what would have been collected under the old code.

But Schneider and Democrats, because it serves their purposes politically, want to talk only about the rate cut and not the elimination of the trigger exemption.

“They are two separate issues,” Schneider writes.

They’re not.

Much like the income tax code, where what we actually pay into the federal government is effected by all manner of rates and deductions and exemptions, what the oil companies pay in extraction/production tax is the product of the totality of the oil tax code.

If changes to the oil tax code result in an increase in the tax obligations of the taxed, that is a tax hike. It is not a tax cut, as Democrats claim. It has not cost the state revenue and contributed to budget shortfalls, as they also claim.

These are lies. Our liberal friends know better, but they say them anyway, and when called out they flood the zone with rhetoric to obscure their lie.

Democrats wanted to eliminate the trigger exemption without the reduction in the overall tax rate. That would have resulted in an even larger tax hike for the oil industry. It’s fine if Democrats want to defend that position, as ill-advised more moderate-minded people might think it, but it still doesn’t make the reforms Republicans passed a tax cut.

It cannot be a tax cut if it results in hundreds of millions of dollars in additional taxes paid.