North Dakota is benefiting from a fantastic economy and leads the nation in many economic indicators. Our prosperity has lead to the opportunity to consider a true change in the state income tax code. Last fall and subsequently in the spring of this year, I requested that Legislative Council prepare the bills that I intent to introduce in the next legislative session should I earn re-election to the House of Representatives.
I am most interested in the income tax in our state. Last session, I made an attempt to suspend the income tax for two years. It was an innovative proposal however it did not gain enough traction out of the House Finance and Tax Committee and was defeated on the floor of the House. While I am not speaking for the majority caucus, recent conversations with some of my colleagues in the legislature lead me to believe there is more interest in this concept than in previous sessions.
The proposal I’ve prepared for next session does not call for the elimination of the personal income tax, but it does take the rate to zero percent. This is not a suspension, nor is it a trial. The legislature has succeeded in the past few biennia in reducing income tax rates and this is the same process as has been used in the past.
North Dakota revenue projections have been cautious in recent history and just this week, projections in oil revenue for the upcoming biennium are substantially higher than previous forecasts. Seven other states do not have a personal income tax and none are in the fiscal position our state is in currently. Priorities such as infrastructure, water projects and education can be funded without the income tax.
There will not be a lack of debate over this and other tax proposals and I look forward to and will be prepared for those opportunities. One such argument will be that this will “cost” the state millions. The reduction or elimination of an income tax has no associated cost, just less revenue to the state government. This proposal will be scored with a hefty fiscal note, but it’s time to finally have this serious discussion. One thing is for certain, if 2013 was not the appropriate time to fully relieve personal productivity, then 2015 certainly is.