As a former North Dakota tax commissioner and director of the Department of Management and Budget, I was unimpressed with the pattern of expenditures that evolved from the recent special session of the Legislature.
Since both houses passed the income tax measure, the legislators of both parties can share the blame for this fiscal misstep. The measure passed unanimously in the House and by a vote in the Senate of 40-7.
Gov. Doug Burgum said the income tax rebate of up to $350 a year will be putting money back into the pockets of hardworking North Dakotans. He forgot that much of the money the state is playing with – at least $1,000,000,000 – comes from the federal coronavirus money, if not directly, indirectly for sure.
Tax Not Onerous
Cutting the income tax was bad public policy, no matter how bipartisan and unanimous it may have been. In the first place, North Dakota’s income tax is not onerous and is the only tax that reduces the regressivity of the total tax system, meaning that low-income people will continue to pay even more of their income in taxes than do the upper-income people.
Under the new legislation, the income tax rebate will be paid only to those who paid income taxes. In other words, the low-income people will get no benefit from this bonanza. Pay Little, Get Little
Tax Commissioner Ryan Rauschenberger estimates that the $350 will erase the income tax liabilities of around 300,000 North Dakotans. How many of these now pay $100 or less? Those who pay minimal income taxes will benefit minimally while those who get the $350 will benefit more.
This would look like fiscal fairness 90 years ago but it does not reflect the nature of economic circumstances for thousands of North Dakotans who no longer own businesses or farms. The level of social and economic interdependence has grown significantly.
Many people no longer have independent sources of income as in the days of old but are clerks, office workers, tradespeople and others who work at the behest of some higher authority. Because of the instability of employment today, they are dependent on private and public sources to supplement or guarantee a minimal existence.
It is a responsibility of the state government to provide the new level of commonality in order to have a peaceful and productive society. While we bragged about our self-reliance decades ago, we are now in an era when the common good requires us to be concerned about those who are in no position to be self-reliant.
But we fight commonality. Our sharing inclinations are smothered by self-interest. The repeal of the income tax means that there will be less in the treasury to deal with the problems of fellow citizens who suffer from regressive taxation because the Legislature can only see the problems of the middle- and upper-income taxpayers.
The Legislature did very little to share the state’s prosperity with those who have needs in an otherwise caring community.
We have around 1,100 abortions annually a year in North Dakota but nothing to help teenagers before or after pregnancy; 75,000 people below the poverty line; thousands of people going without medication and health care; Indians culturally imprisoned on reservations, suffering from all sorts of terminal health conditions.
We have diabetics being victimized by outrageous prices; hundreds of single moms struggling with limited income from two jobs.
What this state needed more than a selfish income tax cut was a greater sense of responsibility for each other, with allocation of resources cognizant of today’s realities.
If farmers can have safety nets, others should also be entitled to economic security.
Lloyd Omdahl, of Grand Forks, is a former lieutenant governor, state tax commissioner and state budget director.