Over the last several legislative sessions, because the State of North Dakota has been enjoying a tax revenue windfall, various tax relief measures have been debated before the legislature. One area of tax relief that has passed has been reductions in the corporate income tax rate, which Democrats hate.
Democrat Senate Minority Leader Mac Schneider told Great Plains News that he “doesn’t like Dalrymple’s proposal for a $25 million cut in North Dakota’s corporate income tax” because “it will benefit large companies like Wal-Mart that don’t need the help.”
What’s interesting is hearing that argument from Democrats in the context of their proposal to give renters property tax relief. HB1221, introduced by Rep. Louis Delmore, would give all North Dakota renters an income tax credit intended to provide them with property tax relief.
From the bill, which Delmore testified in favor of before the House Finance and Tax Committee today:
A taxpayer is entitled to a credit against tax liability as determined under section 57-38-30.3 equal to five percent of the first seven thousand two hundred dollars of rent paid during the taxable year for the right of occupancy of a residential dwelling in this state occupied as the taxpayer’s primary residence. The claimant of a credit under this section must provide information required by the tax commissioner to verify eligibility for the credit under this section, which may include a statement from the lessor of the amount of rent paid by the lessee for the dwelling during the taxable year. Rental of a dwelling in a nursing home, intermediate care facility, long-term care residential facility, subsidized housing, or dormitory at a higher education institution; a dwelling that is not subject to property taxes; or a dwelling owned by a lessor related by blood or marriage to the lessee or for which the landlord and tenant have not dealt with each other at arm’s length is not eligible for the credit under this section. If a dwelling has more than one occupant renter, only one occupant may claim the credit under this section and how the credit will be apportioned among the occupants is the responsibility of the occupants. A credit under this section may not exceed the taxpayer’s liability under this chapter for the taxable year.
The State of North Dakota has actually tried to implement property tax relief through an income tax credit before. That was Governor John Hoeven’s first stab at property tax relief in 2007, and it was a fiasco. It was a huge complication to the state income tax process, and there’s little doubt that Delmore’s bill would be a similar boondoggle.
There are easier ways to provide tax relief.
That being said, the argument coming from ND Democrats for Delmore’s bill is interesting. They’ve made this bill the centerpiece of their alternative tax agenda. “The taxes that people want cut are property taxes, and that’s where our focus is going to be,” Schneider told the Fargo Forum over the weekend. The press release sent out by Democrats in response to Governor Jack Dalrymple’s State of the State address listed, as an agenda item for this session, “Providing meaningful property tax relief for North Dakota families and small businesses while opposing permanent income tax cuts for out-of-state corporations.”
The Democrats argue that renters pay the property tax because landlords pass that expense on to them through the pricing on rent.
Now, I don’t doubt that’s true, but why isn’t that also true of corporate taxes? Don’t corporations operating in North Dakota also pass along their tax burdens to their customers in the form of pricing?
If it’s true of renters, isn’t it also true of Walmart’s customers?
Something tells me Democrats aren’t about to own up to that bit of hypocrisy.