Tax cut idea gets negative reviews

By JONATHAN RIVOLI
Bismarck Tribune

A proposed ballot measure that could give voters the opportunity to drastically cut their state income taxes next fall met with a thud Wednesday in the state Capitol.

Americans for Prosperity, a taxpayer advocacy group that announced the plan Tuesday, is pushing it as a way to stimulate the economy and give taxpayers more control over how their money is spent. But officials of both parties say the plan goes too far too fast.

“We certainly support tax relief, but we believe this is premature,” said Don Canton, a spokesman for Gov. John Hoeven. “It’s much too early to be depending on revenues we don’t know we have yet for tax relief.”

Canton pointed out that legislators just passed a $120 million tax relief package during the 2007 session and won’t have a good idea of whether the state has enough money to responsibly enact another one until the 2009 session.

Under the proposal, North Dakotans would pay 50 percent less in income taxes while companies in the state would see a 15 percent reduction. For a single North Dakotan, that would amount to about $7 to $8 per week, according to Americans for Prosperity.

The group estimates that this would cost the state $280 million over two years. North Dakota’s total general fund budget is about $2.5 billion.

Jaime Selzler, executive director of the North Dakota Democratic Party, said he’s worried this large revenue reduction would eat into revenues for social services and education.

“It’s understandable that most people would see a tax cut and like it, but the reality is it may result in higher taxes or lost services down the road,” Selzler said.

He said a hit to education funding would be especially damaging because it could lead to an increase in property taxes on the local level, which represent a comparatively larger tax burden and have been the main concern of taxpayers.

State House Majority Leader Rick Berg, R-Fargo, also worries about the possibility of a cut now leading to a tax increase in the future.

Berg said the Legislature would be open to further tax cuts when it reconvenes in 2009 and has revenue projections that give policy makers a better idea of whether the state has enough money to responsibly do so.

“I think this is something that’s premature to look at now,” Berg said.

To get the measure on the ballot, Americans for Prosperity will have to collect at least 12,844 signatures by March 11, 2008, according to the secretary of state’s Web site.

Duane Sand, a former House and Senate candidate who serves as state director for the group, said he anticipates no trouble getting enough signatures to get the measure on the ballot.

Sand dismisses criticism about reduced revenues, saying that the tax cut will have simulative economic effects that could result in higher revenues from other sources such as sales taxes.

Overall, he called the criticism “predictable.”

“All politicians are cautious about proceeding on a reform platform, especially one as significant as this, before they’ve talked to their constituents,” said Sand.

North Dakota ranks 39th nationwide in state and local tax burden, according to the Tax Foundation, a Washington, D.C., based tax research group.

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