North Dakota Voters Considering Doing Away With Those Silly Property Taxes

North Dakota has the rare boon of having a state budget that enjoys a nice little reserve, and as such, some of its residents say they shouldn’t have to pay property taxes any more. It’s not unheard of to scale back property taxes — California is one example of a state with lower taxes after passing a voter proposition — but the debate is stirring up emotions nonetheless.

Proponents of a proposed amendment to the state’s Constitution to ban the property tax say they want to be secure in home ownership –Â they argue it’s unpredictable and inconsistent, reports the New York Times, and makes homeowners into renters.

“I would like to be able to know that my home, no matter what happens to my income or my life, is not going to be taken away from me because I can’t pay a tax,” said one fan of the idea.

On the other hand, opponents of the measure, which will be voted on as part of an election Tuesday, including the North Dakota Chamber of Commerce and the state’s largest public employees’ unions say it would disrupt things like how the state would make up the $812 million difference, turn things upside down in the capital of Bismarck and make it tricky to build new schools or hire public servants.

“This is a plan without a plan,” said the president and chairman of the North Dakota Chamber of Commerce, adding that the property tax issue does need addressing in general. “But this solution is a little like giving a barber a razor-sharp butcher knife – and by the way, this barber is blind – and asking him or her to give you a haircut. You’ll get the job done, but you might be missing an ear or an eye.”

Polls indicate that the ballot measure likely won’t pass, as polls show a majority of voters are against the idea.

Gov. Jack Dalrymple, a Republican, is one of those opposing the property tax ban. He says the idea that the budget surplus from oil drilling is enough to cover property taxes for cities and towns statewide without having other taxes go up is false. Certain funds are legally tied in to specific purposes and can’t just be shifted around willy nilly.

“It’s mind-boggling, really,” he said, in an interview, of the effects of such a ban. “We’d be changing everything, frankly.”

The attempted ban might fail, but Dalrymple recognizes that the state’s citizens are angling for some sort of change.

“I have to say that we totally understand that North Dakotans are very concerned about their property tax payments” he said. “You have a tension there, and people say this can’t keep on.”

North Dakota Considers Eliminating Property Tax [New York Times]

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  1. Blueskylaw says:

    Banks also used the excuse that they shouldn’t have to pay into the “emergency” pool because it was already well funded and that the banking industry was humming along so famously that no disaster would ever befall them.

    Then come 2008. . .

  2. MMD says:

    If this were worded differently, people would feel differently.

    It’s one thing to want to opt out of property taxes. It’s another thing entirely to opt in to paying out of pocket for the services that property taxes pay for.

    • sponica says:

      yeah…like your kid was choking and the EMTs came to do the Heimlich manuever, that will be 500 bucks please. oh you put too much kerosene on the charcoal and needed the fire department to come put it out, that will be 1000 dollars please.

      you were in a car accident, that will be 500 dollars for the police officer to come, 500 dollars for the EMTs to come, and another 150 dollars for the police report to submit to your insurance company.

      you want your kid educated in the public school, that will cost money.

      oh you wanted your road plowed?? EVERY storm…that will cost 300 dollars every time the plow comes.

      • Coffee says:

        There’s a really interesting podcast on this topic on This American Life that talks about how this happened in Colorado Springs. People were having to pay to have street lights turned on in front of their houses – and were doing so proudly – even though the a la carte cost was far, far more than they’d been paying in taxes.

      • Bor&Mitch says:

        The more money you make the more likely you’re to accept pay as you go services rather than paying a bulk tax because in the end it will be cheaper. That’s one of the primary reasons it never works. If everyone who owned a home that was over say, $300k decided they were going to forgo paying property taxes and only pay for the services they needed when they needed it, there’s no way

        The threshold will vary by location but the idea is the same..there’s a cut-off point where you’re paying more in taxes than the services you receive, so given the choice you’d decline if you were over the threshold. That’s why “opt-out” taxes don’t exist.

        • sponica says:

          In my town if you’re over 65 or 70, you don’t pay property taxes…it was something they did to “attract” older residents who wouldn’t have kids in the schools. however in another town where there are too many people over 65 or 70, you only have the taxes waived if you’re dirt poor.

    • mikedt says:

      Agreed. And this is why I have less of a problem with paying my taxes than I do with elected officials wasting my taxes. I like public services and good roads, and all the amenities that make us a first world nation. I’d just prefer it spent wisely.

      • Evil_Otto would rather pay taxes than make someone else rich says:

        And where would you get the money to support the added bureaucracy? Someone’s got to collect those payments, someone has to determine if you’ve paid your share and thus are qualified to receive the service, etc. I’m guessing you’re one of those people that scream about big government, but this would grow the size of local government.

        Also, is everyone going to pay to maintain the stretch of road immediately in front of their house? What happens to the road that isn’t in front of their house? Do you pay into a fund that maintains all the roads equally? Gosh, if only there were some organization that would collect funds for this… Maybe that organization could be run by, oh I don’t know, democratically elected representatives… Oh, wait…

  3. Loias supports harsher punishments against corporations says:

    My property taxes went up 23% over last year, so I feel their pain.

    • xamarshahx says:

      Did it go up from re-evaluation of your house or did they just raise it 23%. My town did a complete re-evaluation, but lowered property tax rates so that it wouldn’t screw over people with a massive new tax bill. The town lost some money the first two years, but it was the right thing to do, but I know many towns in Northern NJ just screwed over residents with re-evaluations in 2007-2008 when prices were high and didn’t bother lowering the percentage, leaving people with double or triple the tax bill.

      • Loias supports harsher punishments against corporations says:

        The assumed value of the property went down the year after I purchased (2008) by nearly half. Then two years later as part of the bi-annual re-assessment, it split the difference and the value rose 25% with a mild tax decrease. Then two years after that, 2012, the valuation did not change but the taxes did by 23% due to the change in the mill levy.

        What a roller coaster it’s been.

        I love how the approximate selling price of my home is about 66% the taxable valuation.

        • dush says:

          You are just renting the land from the govt.
          You are just renting the money from the govt.
          You are just renting your very lives from the govt.

          • ARP says:

            Hyperbolic much? Name a country that doesn’t have property taxes. If someone won’t pay their property taxes, how else do you get them? Debtor’s prison? Name a country that doesn’t have a national currency

            (I can match hyperbole) Somalia- go move there. There’s almost no functioning government at all. Tell us how great your liberty is.

    • hymie! says:

      My tax rate has gone up, but not nearly as sharply as the tax basis (the value of my home) has gone down.

  4. Jawaka says:

    While I hate taxes as much as the next person it would be silly and irresponsible for the local government to ban property taxes without knowing exactly where they’d make up the money from.

  5. Coffee says:

    If it ain’t broke, break it.

  6. dolemite says:

    Good idea. I think property taxes hurt the economy. For instance, we have to pay taxes on each car, truck, boat, motorcycle owned, in addition to paying property tax on my house. I’d love to own a clunker pickup to camp with, haul trash or drive in the snow, but I don’t want to pay permanent property tax on something that just sits in my driveway 320 days out of the year.

    I also don’t like the idea that somewhere down the line, even if every bill I have is paid off, and I have enough money for living expenses (say when I’m 80), that the city can decide to take my property away from me because I failed to have enough money for tax on property I own.

    • ajaxd says:

      I agree that property taxes on things other than real estate are bogus but then I don’t know of many places that have them (Connecticut, for one). Taxes on real estate are paying for schools, fire departments, police, etc… Even if you are 80 years old you still use the services so the tax is fair. Older people also get exemptions from school tax portion.

      • Nigerian prince looking for business partner says:

        Personal property taxes are still pretty common.

      • MMD says:

        “Older people also get exemptions from school tax portion.”

        They shouldn’t. Someone paid taxes to support their education.
        People who think they shouldn’t have to pay taxes for education are people who, in effect, want to pull the ladder up behind them.

        • Doubting thomas says:

          it is assumed that older residents have, as a rule, been paying property taxes longer and have contributed their share. This is also because many older residents are on fixed incomes and no one likes articles about grandma losing the family home.

    • MMD says:

      Paying your property tax is a living expense. Plan for it, and you’ll be fine.

      Those taxes pay for basic services that you and everyone else use.

    • Costner says:

      You are hitting on one benefit of such taxes though. If people didn’t have to pay any registration fees or taxes on vehicles, they would be more apt to keep five or six “junker” cars around. The way it is now, having to pay these fees yearly prevents people like my former neighbor from hoarding project cars on his property that he will “fix up someday”.

      The way it is now, if a car isn’t licensed annually it can’t be just sitting around (local laws permit such cars in garages, or in fenced in areas on the property etc). I don’t like paying license fees any more than the next person, but the alternative seems less agreeable.

      Now think of houses and property. If there were no property taxes, people could allow their property to fall into disrepair and they could have empty lots sitting there being undeveloped. If there were no taxes, there is no incentive to develop and use the property, so they just sit around and could even be passed from one generation to the next. By making people pay taxes, there is an incentive to either use the property, or to sell it to someone who will – because nobody wants to pay taxes on something that offers them nothing in return.

      I could agree with tax reform that would reduce property taxes and/or lock them in so they can’t increase more than the rate of inflation etc… but to eliminate them could add a whole new set of problems. I think such taxes actually serve a very valid purpose other than simply acting as a revenue stream for the city/county/state/municipality.

      • sponica says:

        actually the property taxes are a disincentive to buy a new car and instead keep junkers around…when I calculated whether or not I was better keeping my POS or getting a new car, I realized that the registration fees on a new car would be 4 times the registration fees on my POS. which is better, having ONE car that’s 400 dollars a year or 4 junkers that are less than a hundred bucks a year? granted in my state you don’t have to insure vehicles…

        • Costner says:

          In that scenario I’d agree with you. In my state registration fees aren’t tied to value (aside from the sales tax you pay the first time). Yearly registration fees (for plates and tags) are based upon the type of vehicle and the weight, so having one new car costs less than having four old cars.

          What state doesn’t require insurance on a car though? That seems like it would be rather troubling since a lot of people would just refuse to get insurance and if they crash into you, you’re on the hook for the repairs (since taking them to court is likely to get you nowhere).

          In my state anyone found to be driving without insurance gets a fine and can have their license taken away. Even that doesn’t go far enough since they often will just drive without a license. I think they should impound cars until proof of insurance is provided… but that is another discussion I suppose.

          • cowboyesfan says:

            New Hampshire.

          • jimbo831 says:

            I used to live in Kansas. There, you pay two things on your car every year: a registration fee AND a property tax. In Kansas, vehicles are considered taxable property. As such, they are taxed based on the value of the vehicle. My old beater was only about $150 a year. My newer car was about $500 a year. This is before the yearly registration fee as well. The property tax went to the county treasury, while the registration went to the state DMV.

            Here in PA, however, we only pay an annual registration. I think that is much better. I agree with property taxes, but disagree that vehicles should be considered property for that purpose.

  7. bnceo says:

    Just increase income tax so that everyone gets affected instead of just property owners. This can help make up for the loss of property taxes. Also, cut some spending.

    • Duke_Newcombe-Making children and adults as fat as pigs says:

      We can’t do that. It’ll hurt the jerb creeatorz.

    • incident_man says:

      OH NOES! That smacks of SOCIALISM!!!!111!!!

      • bnceo says:

        So what do you call punishing people who design to own a home and who can instead of slumming in an apartment?

        It’s similar to raising the tax on the “rich”. You are punishing people for succeeding in life. If I”m going to be taxed to bits, why even bother trying to make more money?

        • Evil_Otto would rather pay taxes than make someone else rich says:

          The rich have benefited from the framework that a stable, civilized, lawful environment provides. They have taken the opportunities that civilization has given them to the fullest. Good for them for accomplishing what they have.

          Now they’ve earned the ability to contribute back to society in line with how much they have accomplished.

        • ARP says:

          We are no where near the point where people stop trying because taxes are too high. If we get up to 70%, with no deductions, we can talk. But right now, nope, people will still work hard if they have to pay a few points more.

        • JJFIII says:

          Who told you renters pay no property taxes? It is built into the cost of rent. In fact in many states the property tax is LOWER for homesteads (property you own and reside in) than it is for second homes or income properties. THAT means the renter actually pays MORE than the owner on equally valued property.
          If you think people are disincentivized to succeed, you are not paying attention. In a time of great growth 1950-1963, the top tax rate was 91-92%. Yes, you read that right. Was Eisenhower a socialist? The 50′s were known as an affluent decade.

    • Cicadymn says:

      Yea! That’s surely going to help our fiscal hole! Tax our way out of a recession!

      Let’s tax the fat out of people too! That’ll TOTALLY work!

      Then tax the stupid out of people! Because then we’ll all be super smart! Because taxes ALWAYS WORK!

      Yeaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

      • bnceo says:

        No. I’m simply saying increase the tax on everyone and get rid of the tax on property. To have to pay for something that you own after your mortgage is done is pointless. You are simply renting from the government. You see nothing wrong with that?

  8. That guy. says:

    Is that Notch in the picture?

  9. Stickdude says:

    “Polls indicate that the ballot measure likely won’t pass, as polls show a majority of voters are against the idea.”

    Were those polls created by the village board of Massapequa Park village board?

  10. TuxMan says:

    BAN PROPERTY TAX.

    Zero freedom when your land can be taken from you by taxation.

    Many States, “the people”, have already realized this truth and put a stop to it.

    Income is not guaranteed. If you own your land, you can collect water, grow food and with zero debt, you truly have freedom.

    • nishioka says:

      > Income is not guaranteed. If you own your land, you can collect water, grow food and with zero debt, you truly have freedom.

      The government can come through and claim eminent domain on your property anytime they want. That’s not “true” freedom, that’s called living on borrowed time.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      You have all the freedom you want. You’re free to live someplace where there are no property taxes. What’s stopping you? If you really hate property taxes that much, then move!

      People always bitch about those on government assistance wanting ‘something for nothing’. I see no difference in what you’re proposing. If you’re willing to forgo the services that property taxes pay for, then move someplace where there are no property taxes.

  11. finbar says:

    This has worked out real well here in California. The state did a great job taking over the funding for schools.

    I say go for the glory too, North Dakota!

    • xamarshahx says:

      exactly! how is California a good example? They are almost bankrupt and raising taxes on everything else.

    • Sound Money Girl says:

      Exactly! When people do things like this, they only look at next year, not 30 years down the line. North Dakota has a surplus this year, not forever. California is 40 years down the line from limiting property tax and look at us now. It’s not a pretty picture.

    • Jevia says:

      Proposition 13 in CA (yes, the number lives in infamy) was the absolute worst thing to happen to the state and the schools. I remember being directly impacted by its passage, no more school buses (hope your parents can drive you), no more school field trips, language, art and music classes significantly cut. I know, pretty much the Republican paradise.

      • arcticJKL says:

        I remember it as a kid as well. They screamed all the libraries would close that the teachers would had to be laid off and we would lose the bulk of fire services. In the end they closed the library one day a week, rather than eliminate an administrator. They didn’t give teachers a raise rather than fire an administrator.

        I did miss summer school though. It changed from an extra month of learning for a small fee to two months of fun activities that cost a lot of money.

        On the other hand my grandmother never had to pay more than her house originally cost just to meet the property tax.

  12. xamarshahx says:

    People are so dumb, instead of removing taxes, why not follow up and make sure it is being spent wisely? Taxes are needed for all the basic services the town provides. Conservatives always claim the free market will take care of itself, If corporations were so good at managing things themselves and creating an amazing free market, we wouldn’t have the mess that we do with Healthcare and the Banking industry. If tax dollars are being wasted, go after the waste, not stupid ideas like this.

  13. incident_man says:

    I hate property taxes. I own my house (am in possession of the deed), but I DON’T own it if I don’t pay my property tax?!? Never could get my mind wrapped around that concept.

    There must be a better way to do things.

    • TuxMan says:

      You have to pay the cartel every year for the right to own property. We are born into slavery and pay for the illusion of freedom.

      • jasonq says:

        Never mind that the only reason the property system in this country exists at all is due to the government.

    • Earl Butz says:

      You are in possession of an alloidial deed to your home, which explicitly states that you have title but perpetually owe taxes to your sovereign…in this case the government of your state. Most of the United States has been this way since day one, as were all the former Brit colonies, and indeed most of the world.

      Nevada was your last shot at getting a truly free, no tax deed. You had to pay 100 years of taxes all at once, it was limited to only some sections of the state, and most importantly, that window of opportunity closed in 1982.

    • MMD says:

      Propose one, then.

      Tea partiers and their ilk don’t want to pay for anything, but have no ideas whatsoever beyond that.

      • incident_man says:

        I’m about as far from a Tea-party fanatic as one can get. You want an idea? Ok, here goes:

        An increase in the progressive income tax (i.e. those who can afford more, pay more, as a percentage of tax), OR a progressive sales tax (the higher the cost of an item, the greater the percentage in tax, up to a particular limit). That way, everyone pays.

        Of course, if you’ve read a good portion of my former posts, you wouldn’t make the characterisation that I’m a conservative or a Tea-party fanatic. But, that’s just too much work, isn’t it? You’d rather make your generalisations, huh?

  14. homehome says:

    I would say for them to check to see how it’s spent first before you go through and get rid of stuff.

  15. Extended-Warranty says:

    I’ve come to the realization that people only want what is best for them, not the greater good. This is completely absurd.

    I will agree that property taxes are too high these days. The correct plan of action is to go after the people who avoid taxes, streamline spending, then and only then, can property taxes be lowerer, but not abolished.

  16. AEN says:

    “…polls show a majority of voters are against the idea.”

    Chances are a “majority of voters” are not property owners.

    • Costner says:

      Or they are smart enough to recognize the state needs a certain amount of revenue to provide the services they currently offer. If you reduce that revenue, you have to slash services… so everything from the Highway Patrol to the road maintenance fund to the preventative healthcare fund for those with low income to the per day fees allowed for Nursing home care would be slashed.

      Either that or the state would simply raise taxes in other areas and the net effect would be zero while land owners have zero incentive to develop their property due to not having to pay taxes on it.

    • JJFIII says:

      So you have the mistaken belief that renters and non=property owners do not pay property taxes? WRONG

  17. wade says:

    One question – in the “blind barber” metaphor, was this barber blind before becoming a barber, or did he become a barber before going blind?

  18. Stannous Flouride says:

    Assuming this is like CA’s Prop 13, they’re using the shibboleth of family property taxes to create another way for corporations to avoid paying taxes.

    In CA if a property changes hands it’s supposed to be reassessed but companies get around that by merging and acquiring each other. They’re paying taxes at 1973 rates while new homeowners are footing the bill.

    Also, to add any taxes or change any part of the law, you need 2/3 majority which means that 34% is the new majority.

  19. prizgrizbiz says:

    I live in North Dakota. For years the talk shows here have promoted the opinion that the retired folks who live in homes that are paid off are being hurt by having to come up with ever-increasing property taxes every year to stay in their homes. Now the same shows express a contrary view.

    The concept is great, the details fail. A local government would have few options for raising money for local needs without going hat in hand to the legislature, which meets for one session every two years. This is unworkable.

    The problem here is even when property tax relief is passed, the locality raises the valuation on the property. This is the problem with ad valorem taxes.

  20. Earl Butz says:

    I own not one, but two properties in Southern California. I was born here. I saw what Prop 13 did to our state finances. I benefit, but realize that my benefit comes out of someone else’s hide.

    North Dakota will undoubtedly pass this. And they will regret it for generations.

  21. soj4life says:

    Why is it that people in leecher states are always looking to pay less taxes.

    http://taxfoundation.org/sites/taxfoundation.org/files/UserFiles/Image/Blog/ftsbs-large.jpg

  22. SoCalGNX says:

    If the oil companies keep polluting this state as they have done around Williston, it won’t matter. No one will be able to live there anyway.

  23. HogwartsProfessor says:

    A friend of mine who lives in ND said in chat earlier that the property taxes went WAY up. The article says assessments have increased them. I think they just want to not get gouged for them.

  24. Coffee says:

    In 2010, North Dakota received $1.45 in federal support for every $1 its residents paid in federal taxes. In contrast, California, a cash-strapped state, received $.87 for every dollar paid. So…um…instead of cutting your property taxes, could you…like…still pay those and maybe use the leftovers on things that you’ve been requesting federal money for? Thanks.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      The right likes to scream about people getting “something for nothing” when they accept public assistance. Looks to me like they want the same thing.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      By the way, what’s your source for those figures? I know that Texas is in the same situation, but I don’t know by how much.

      • Coffee says:

        Texas actually isn’t, surprisingly, but many of the red states are.

        http://www.motherjones.com/politics/2011/11/states-federal-taxes-spending-charts-maps

      • Coffee says:

        Also, if you want my two cents’, I think this is what happens when you have a Senate that is inherently undemocratic. Senators for the small (often red) states have far more power relative to their constituency than counterparts from the larger (usually blue) states, which allows them to tie spending provisions in before they’ll sign off on budgets. In the end, they may be receiving a smaller piece of the pie, but it represents far more money, relatively speaking.

        • dush says:

          The congress is bicameral for a reason. The Senate was supposed to provide equal representation for the member states of the federal union. The House is the population based representation. The executive signs and carries out the laws enacted by the cooperation between the representatives of the states and of the people.
          Then they went and made Senators be elected by popular vote. The wrong solution to what was a real problem of corruption.

          • Coffee says:

            My point is that the Senate is inherently undemocratic because it creates unequal representation. When you have 13 large states that represent more than 50% of the population who want one thing and 15 smaller states that represent less than 10% who want another, the 10% are going to get what they want in the Senate, all other things being equal.

  25. Nikephoros says:

    This is insanely short sighted. Governments have run into the problem of budget surpluses since Roman times, and the “permanently get rid of taxes” solution usually ends in disaster. Why? Because while the tax revenue might not be needed now, a future need for the money will almost certainly arise. And while it’s remarkably easy to get votes to cut taxes in a good economy/surplus, it’s difficult to implement or raise taxes in a bad economy/deficit.

    And now a historical example, since I’m a nerd for this stuff…

    In the 10th and early 11th century the Byzantine Empire was running budget surpluses of such enormous amounts (and since it was a gold standard economy) that the lack of gold in circulation was beginning to deflate the currency with pretty serious consequences. Emperor Basil II couldn’t figure out a solution, as the military spending (the largest budget item of any pre-modern government) was already at the largest amount that was reasonable. And a building programme wouldn’t even suffice to dent the surplus.

    So what he did was stopped collecting taxes for four years, and permanently lowered the taxes empire-wide afterwards. And he still died with the largest treasury reserve in pre-modern history. 50 years or so later when there were a series of military crises, the government was unable to institute new taxes since two generations of aristocrats and merchants were raised who were used to the low taxes, and were never aware of the old tax rates. Eventually the cash strapped government nearly collapsed and never fully recovered.

    tldr; don’t “permanently” eliminate taxes now that you may conceivably require again in the future, because taxes are harder to implement than they are to eliminate.

  26. Almighty Peanut says:

    i live in virginia where we still have to pay personal property taxes on our VEHICLES every single year. i’ve had some years where my cars apparently appreciated in value and cost me more the previous year. i don’t mind paying personal property tax on you know… an actual property…

  27. mannyvel says:

    Well, that’s one way to cut government spending.

  28. voogru says:

    You don’t own property in the United States.

    You just rent it from the government. You know how you need to get a permit to do nearly anything? Yup, that’s because it’s not your property.

  29. arcticJKL says:

    Oil is paying the bills right now. I’ve always felt if you don’t need the tax, eliminate it.
    I think a better wording of the amendment would have been eliminating the property tax until oil revenue drops below $X.

    Still, better to eliminate the tax while you can and make the politicians bring it back when its needed.

    Will all the surplus money, if it fails, be set aside for rainy days?

    • varro says:

      Then put a tax on the oil revenue, with the money earmarked toward property tax relief, income tax relief, or a dividend to citizens like the Alaska Permanent Fund.

      If the oil revenue goes down, the tax subsidy disappears, but the taxes themselves don’t.

  30. Mad Monk says:

    America did fine for 120 or more without property taxes.

  31. DerangedKitsune says:

    Does ND have any state debt? If the answer is yes, then taxes remain and surpluses go towards eliminating such debt. If not, then taxes are reduced, but never eliminated so that if circumstances change, they can always be reinstated.