One of the best constitutional amendment proposals I have seen in years comes from a taxpayer group in North Dakota.

Please consider Amendment would abolish ND property taxes, order Legislature to figure out new revenue plan

Backers of a constitutional amendment to abolish North Dakota property taxes believe they have enough petition signatures to put the idea on the ballot, even though the number they thought they needed has risen.

“It’s a new idea. It’s something a lot of people hadn’t even considered until we put it in front of them,” said Charlene Nelson, of Casselton, who is chairwoman of the initiative campaign.

The amendment bars the state and local governments from levying any property tax, beginning Jan. 1. It says the Legislature must use other revenue sources, such as taxes on sales, income and energy, to decide how to replace the revenue that local governments will lose.

North Dakota’s Constitution allows voters to bypass the Legislature and put a constitutional amendment directly to a vote if the proposal’s supporters can gather enough petition signatures.

Property owners were billed $774.6 million in property taxes in 2009, according to the most recent North Dakota Tax Department data. Local school districts’ share was about 41 percent, while cities billed 28 percent and counties 26 percent, the data say.

By comparison, the state collected $883.3 million in sales taxes during its 2010 budget year, which ended June 30, according to the state’s most recent comprehensive annual financial report.

Individual and corporate income taxes raised $380.1 million during the same period, while taxes on oil, natural gas and coal raised $633.5 million.

Property taxes on a person’s home means he or she never owns it, even after its mortgage is paid, Nelson said. The annual property tax bill is due regardless of a person’s income, while taxes on income and sales depend on the amount of money a person has to spend, she said.

The proposed property tax ban “goes to the core of the lot of the problems that people in this state are facing. Economics, low-paying jobs, seeing their young children move out to other states,” Nelson said. “The public debate, I think, is going to be the most healthy thing that comes out of this.

Never Owning Your Own Home

I agree with nelson that paying property taxes on your home means you can never own it. It is an insidious tax that hits those on fixed income the hardest.

Of course school districts love it. They collect more taxes over time, then waste the money. When valuations crash, they want to raise the tax rate to “make up for it”.

Unlike California Property 13 type non-solutions that create huge winners and losers, everyone but the tax recipients win by abolishing them completely. Even renters win because landlords will not be struggling to pass on property tax hikes. Abolishing property taxes also helps out struggling businesses and creates an incentive for property owners to move businesses to states without such taxes.

I am also against taxes on store-bought food, medicine, and clothes priced below a certain amount. Although everyone would benefit from such tax relief, elimination of taxes on food, shelter, medicine, and clothes especially helps those who spend most of their money on such items.

Because of the new census, the petition gatherers do not have the signature cushion they thought. However, they still have a slim cushion and they have until Midnight Tuesday to gather more signatures. Good luck to them.

Side Benefit

As a side benefit, cities, towns, and counties would be able to fire all the local assessors, lawyers, and assistants associated with figuring out the tax and collecting it.

I would love to see a wave of proposals by states to abolish property taxes along with the other taxes I mentioned. So would the real estate industry, a group I generally do not side with. Such a move could hardly come at a better time for the real estate industry.

Mike “Mish” Shedlock
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