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Lloyd Omdahl, Published May 12 2013

Omdahl: Rain on tax cut parade

It is not my wish to rain on everyone’s parade, but the huge tax cuts passed by the recent Legislature are neither wise nor conservative.

In the first place, the cuts have been erroneously defended as returning hard-earned money to the taxpayers. That is plain political rhetoric intended to justify a self-serving raid on the state treasury.

It is not money paid by North Dakota taxpayers. It is money provided by the oil companies in the Bakken fields. So let us admit that this is not revenue we paid into the state treasury.

Oil money is different than ordinary tax revenue because oil is an intergenerational, depletable resource that belongs not only to the current generation but to future generations. They will not see the benefit of this resource if the current generation burns it all up on present-day consumption.

North Dakota needed a few other things before a major tax cut for a population that is not oppressed by the tax collectors. In fact, our recent ranking as one of the 10 best states in which to retire was based substantially on our low taxes, computed before this Legislature passed a single tax-cut bill.

The Tax Foundation’s most recent report, based on 2009 figures before the tax cuts of 2011, ranked North Dakota’s property tax level as 25th. Considering the 2011 property tax cuts, this is now around 1.25 percent, which is closer to the bottom of the property tax states.

According to the Tax Foundation, North Dakota had the 10th-lowest personal income tax in the country and ranked among the 16-lowest states in total tax burden.

Some legislators will tell us that it was not for ourselves that we cut taxes but to give North Dakota a better business climate. That, too, is a myth that keeps coming back disguised as truth.

Taxes rank fifth – not first – in importance when corporations consider a business location. We could guarantee a tax-free environment for 50 years and new industries would not be popping up in North Dakota. We have more limitations than taxes with which to deal.

If taxes were so important, industry would be fleeing Minnesota, California and other higher-tax states.

As an intergenerational one-time resource, the benefits of oil taxes should be shared as equally as possible with several generations – including the current one.

Strategic spending would have dictated that providing preschool and kindergarten for every child in North Dakota would have been a better long-term investment than immediate tax cuts for the under- taxed. Studies prove without a doubt that an early start for children is a long-term benefit that will keep on giving for the entire life of the child.

The students in our colleges and universities are now facing another 5 percent increase in tuition. While some of us are getting unneeded tax breaks, students are being asked to make additional sacrifices to get the kind of training and education that will build the future for North Dakota.

We have thousands of low-income elderly who could have been made exempt from all property taxes automatically. Then there are the unmet medical needs all across the state.

While immediate consumption may be appreciated by present-oriented consumers, even prudent businesses forgo immediate profits and invest in retooling for future growth. We now have the money to do some extensive retooling.

The work of legislatures can be measured by their balance of individual benefit versus the common good.

In this session, we pandered to the materialism of the present and sacrificed the common good of the future.

So let it rain, let it rain.


Omdahl is a former North Dakota lieutenant governor and a retired University of North Dakota political science teacher.