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Legislative Report District 13: Tax time a little less burdensome

It’s that time of year which many dread—tax time! Both property taxes and income taxes will soon be due.

While we may lament the ever increasing tax and regulatory burden those in Washington, DC saddle us with, there is good news here in North Dakota—Taxes (both property and income taxes) are going down!

During last year’s North Dakota Legislative Session, we were able to once again reduce the income tax burden of our citizens and also to increase the subsidy to local school districts, with the requirement that they further lower your property taxes. In addition, the Legislature increased the Homestead Tax credit, which further reduces property taxes for senior citizens of modest means and the disabled.

If you fit into either of those categories, be sure to see if you qualify. The office of the North Dakota Tax Commissioner has complete information and you can reach them, toll-free, at 1-877-328-7088 (select option 6).

Although the state is often blamed for high property taxes, they are local taxes, assessed by cities, counties, townships and school districts. Despite that fact, legislators have taken the burden of high property taxes on North Dakota citizens very seriously and have made efforts to help lessen that burden.

The first such effort, years ago, was an income tax credit for those who also paid property taxes. This made some sense, since the state actually does levy and collect income taxes, so it was an attempt to lower a state tax, for those also burdened by a high local tax. The process, however, was confusing and convoluted and it was quickly scrapped.

It was replaced by what is often called “property tax relief”, a misnomer because you can’t “relieve” a tax you don’t levy or collect, that’s why I’ve used a more accurate description—a school subsidy. This involves the legislature appropriating ever increasing amounts of money to school districts with the requirement that they, in turn, reduce your property taxes proportionately.

This isn’t a perfect solution, for a number of reasons. First, it doesn’t affect other property taxes assessed by other local political subdivisions. Second, there is a temptation to raise taxes locally, because they’ve been lowered by the state subsidy. Third, the “relief” can be (and often is) minimized by increases in “assessed valuations”. That occurs with relative regularity, when tax assessors decide that your property is worth more, which results in your taxes going up, without local officials actually voting to increase tax rates.

This is a problem of which both legislators and local officials are very well aware and which I believe needs to be better addressed in future legislative sessions.

In the meantime, enjoy the lower property and state income taxes again this year, made possible by recent acts of the legislature!