North Dakota Republicans Deeply Divided Over Tax Relief

0 – Bismarck/Minot/Williston/Dickinson-KXNEWS,ND

Last week Rep. Scott Louser, a Republican from Minot, announced here on SAB that he would be introducing legislation to take the personal income tax rate for all state tax brackets down to zero.

“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,” wrote Louser. “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.”

Louser’s move was endorsed in a separate post here on SAB by Rep. Rick Becker, a Republican from Bismarck, who argues that eliminating the income tax would benefit North Dakota by leaving more money in the pockets of North Dakotans. “They will spend it and invest it to the distinct benefit of all North Dakotans, as it drives our economy to even greater prosperity,” he wrote.

Rep. Louser’s bill definitely will not be the only one to address the income tax. I’m told that House Majority Leader Al Carlson also has eliminating that tax in his sights, and will be introducing legislation to do it.

But not all Republicans are on board. Shortly after Rep. Louser announced his legislation, Rep. Andy Maragos – another Minot Republican – dumped on the plan, saying he’d much rather focus on property tax relief. “While all taxes are significant, this one is not an egregious tax. I’m not in favor of eliminating the income tax itself, but if we reduce it even a little more I wouldn’t be opposed to that. I think, for me, the focus will be on to ease the burden on the property tax payers,” Maragos told KXMC (video above).

Maragos is representative of a strong contingent of Republican political leaders who get a little queasy at the idea of giving too much money back to the taxpayers. Of course, that’s never how they describe it. Usually it comes in the form of an expressed interest in “property tax relief.” Which might be all well and good, except that the “property tax relief” the Legislature has been passing isn’t so much tax relief as it is increased state spending on local needs.

That’s not tax relief. That’s a spending shift, from local to state. And the executive branch will be pushing more of it in the coming session. Tax Commissioner Ryan Rauschenberger, before going on leave to seek treatment for alcohol addiction, announced a proposal for more state property tax buy downs in the 2015 legislative session.

But, again, lower local spending burdens by increasing state spending burdens is not exactly tax relief.

Also keep in mind that there was hostility to even reducing the income tax by a meaningful amount last session. After a bill from Louser to put the income tax into a moratorium for two years was defeated in the state House, that chamber passed more than a half billion dollars of income tax relief. Unfortunate, the Senate reduced that tax cut to the $125 million Governor Jack Dalrymple included in his executive budget. Ultimately the two chambers compromised and North Dakotans got about $250 million in income tax relief, but it wasn’t nearly enough as the state continues to run a hefty budget surplus.

Even after a 62 percent increase in state spending in the current budget.

All this adds up to an interesting dynamic on tax relief for the 2015 session. On one side, we have some aggressive tax reformers in Louser, Carlson, Becker and others who want to make major changes. On the other side, we have Republicans like Maragos, Rauschenberger and Dalrymple who seem more interested in the appearance of tax relief than the reality.

In the past Dalrymple and the anti-tax reform faction have been pretty successful in watering down tax cuts and reforms. The question is, will they be successful again in 2015 or will the tax cutters finally get what they want?