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Janell Cole, Published March 18 2009

ND bill proposes taxing nonprofit executives making more than $1 million

BISMARCK – Inspired by Blue Cross Blue Shield of North Dakota, some lawmakers are proposing a special high income tax rate for executives of nonprofit agencies making more than $1 million.

Democratic-NPL leaders in the state House will seek approval for a delayed bill to be acted on before this session ends next month, they said Tuesday.

Last week, BCBS’ board fired longtime president and chief executive officer Mike Unhjem and revealed it would pay him a $2.2 million severance package or two years’ worth of salary and benefits. They cited compliance with a 2007 agreement with Unhjem.

The Democrats noted that, as a nonprofit entity, BCBS itself pays no property tax or corporate tax, and that as a mutual organization, is owned by its policyholders.

That means the cost of the Unhjem severance is borne not by corporate stockholders but by North Dakotans who buy their health insurance from BCBS, said House Minority Leader Merle Boucher, D-Rolette. That includes state government’s health insurance plan that covers state employees, elected officials and legislators.

“Blue Cross Blue Shield is a mutual, nonprofit corporation. They receive special tax advantages,” said Rep. Joe Kroeber, D-Jamestown. “A golden parachute should not be part of executive packages.”

House Majority Leader Al Carlson, R-Fargo, called the proposed bill “an interesting concept.”

He said the House’s delayed bills committee would likely meet this afternoon and consider approving the bill for introduction.

The proposed bill would create a 70-percent tax rate for any portion of a nonprofit executive’s net income that is over $1 million.

The bill has an effective date of Dec. 31, 2008, meaning it would apply to income Unhjem or anyone else with that income this year.

Carlson said the delayed bills committee also will consider several resolutions being proposed, one encouraging efforts to get Fargo native Roxana Saberi released from an Iranian jail.

Cole works for Forum Communications Co., which owns The Forum. She can be reached at (701) 224-0830 or forumcap@btinet.net