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Wednesday, January 18, 2012


Picking Winners and Losers in North Dakota



Last week, we told you about how a company in oil boom country was given a five-year exemption on income taxes due to their business being so good they needed to expand.  This exemption was granted by the State Board of Tax Equalization (SBTE) - which is comprised of The Governor, State Treasurer, State Auditor, State Agriculture Commissioner, and the State Tax Commissioner.


According to an analysis of these type of requests, roughly 80% of the companies that have requested income tax exemptions since 1997 have been granted those exemptions.  (The compiled list can be found here, while the complete SBTE report list can be found here.)


A request was made to the North Dakota Tax Department to find out how much these discretionary tax exemptions have been worth over the years.


The response from the Tax Department was as follows:


"We do not have a current total of the estimated value of all income tax exemptions that have been granted.  Those figures are only estimates and may be far from the actual value after returns are filed.  Actual income tax figures are covered by confidentiality statutes."  (Source: Marcy Dickerson, North Dakota Tax Department)


Long story short: Chapter 40-57.1-04 of the North Dakota Century Code gives five elected officials of state government the power to exempt certain specific businesses from state income tax, but the value of those exemptions is protected by confidentiality law. 


Not too transparent is it?


The issue of discretionary tax exemptions is one of the biggest single drivers of bloated property tax bills.  Around the state of North Dakota, millions of dollars worth of property are regularly taken off the tax rolls under the guise of "economic development" for often times up to five-years.  When these property owners don't pay "their fair share" (which would be the same percentage everyone) the cost of government that they are not contributing to is shifted to those who are paying their fair share.  


These discretionary property tax exemption are estimated to artificially inflate your property tax bill by 5-20% (depending on which city you live in). These discretionary tax exemptions are a local decision make by your local elected officials.


Putting this discussion into the Big Picture, during this presidential election season, we have heard all the candidates talk about how "government should not be picking winners and losers" when it comes to the policies that President Obama promotes with regard to companies like Solyndra. 


As groups like the North Dakota Policy Council have accurately pointed out, the state of North Dakota has long embraced the principles of "Obamanomics" under the guise of "economic development."


There are all sorts of "sweetheart deals" that benefit a select few companies.


Last legislative session, businesses in North Dakota were able to obtain a small corporate income tax rate reduction.  (Rate reductions for everybody are the only fair way to affect tax policy.)


If it were not for the leadership and persistence of legislators like Representative Craig Headland (R-Montpelier) there would have been no corporate tax relief because it was not part of Governor Jack Dalrymple's plan.


Too many of North Dakota's (Republican) leaders like to pick winners and losers.  They just don't like to admit that their policies create that result.








Let your voice be heard on this issue, contact members of the State Board of Tax Equalization:


Governor Jack Dalrymple - link

State Treasurer Kelly Schmidt - link

State Auditor Robert Peterson - link

Agriculture Commissioner Doug Goering - link

Tax Commissioner Cory Fong - link

Click here to email your elected representatives.


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