North Dakota may abolish property tax
Next summer residents of the state will vote on a constitutional amendment to eliminate tax on real estate.
This post comes from Kay Bell at partner site Bankrate.
Nobody likes paying taxes, even when we acknowledge that we must do so to get services. But which tax do we hate the most?
It's a close race, but last year property taxes edged out income taxes as the most hated tax. Yes, even though this levy can offer some tax benefits to homeowners who are allowed to deduct it on their federal income tax returns, annual real-estate tax bills really set us off.
And apparently, North Dakota residents hate property taxes more than other Americans. We'll find out for sure next summer when North Dakota voters get to decide whether to abolish property taxes.
In June 2012 a constitutional amendment to eliminate the tax will be on the ballot. If approved, it would make North Dakota the only state in the nation to abolish real-estate taxes.
Like many ballot initiatives, this one will go before the voters thanks to a grass-roots effort. A citizens' group critical of increased government spending pushed for the measure after noting that North Dakota's general fund spending has doubled from $2 billion to $4 billion since 2005.
While elimination of property taxes is dramatic, there have been some precursors nationwide.
Ballot initiatives have allowed many jurisdictions to limit the rate of growth of real-estate taxes. See California's landmark Proposition 13 (.pdf file), the granddaddy of real-estate tax rate restrictions.
Other taxing districts have forgone collection of property taxes in years when there was enough other revenue to cover government operating costs, but the collection resumed later.
Added income is the catalyst behind the North Dakota effort to kill property taxes. The oil industry is booming in the state, especially the northwestern section, providing local governments more revenue without raising tax rates. Post continues after video.
As a native of the West Texas oil patch, trust me. The boom won't last. But the services paid for by property taxes, most notably public schools, will continue to need money.
If the property tax system is axed, the proposed law would force the state legislature to come up $740 million for North Dakota's school districts, counties and cities. The fight over apportioning that money would be brutal.
And let's not forget about America's real pastime, lawsuits. Opponents and proponents alike of ending property taxes will clog the courts with requests for rulings on the state's obligation to provide revenue to replace property taxes.
Supporters of the North Dakota initiative say the property tax ban is necessary to keep older homeowners on fixed incomes from being priced out of their homes by rising tax bills.
Point taken. But deal specifically with that group of adversely affected taxpayers. Enact a new property tax relief program or expand existing ones specific for lower-income senior citizens.
Don't create a whole other set of impacted taxpayers statewide who see their schools demolished because the funding mechanism was eliminated.
But don't nuke a system that lets each taxing district be in charge of how money is spent for local needs. Once it's gone, I'm willing to bet that another ballot measure effort will soon begin to put the property tax system back in place.
More on Bankrate and MSN Money:
You obviously don't know the North Dakota system very well. Did you know that each township owns a section of land. The purpose of each of these sections is to provide income to fund the school districts of that township.
As a Florida resident, I can tell you that as property values rise, local gov't create ways to spend the money collected by property taxes. When those values drop, they will have to scramble to find ways to do without the money they never really needed in the first place.
I've seen it first hand in the housing bubble.
North Dakota is one of the few states with a currently sound fiscal footing. I think we should let them take care of themselves.
Real estate tax is the most unfair tax of all, people work to build a home and business, and are taxed for doing it.
Real tax's largest portion supports schools, and we allow illegial aileans in the country by the millions and get an education, then after that they go home and hate us, and we send them billions more to try to buy their friendship. How stupid can we be??????????
A flat income tax is fair to all. no loopholes!!!!!!!!!!!
As a home owner I feel like a hostage that if I don't pay taxes on it they will take it....Mayby what they should do is up the state tax to pay for schools.. Everyone that works will pay for schools not just the home owner.The system is so unfair but then again Politicans don't give a dam for you..As long as they get their high retirement pensions which is three time the national average.
Eliminating any tax is a good idea. Property taxes are unconstitutional since the constitution guarantees a man the right to own a house outright which the government cannot take away, and yet, if one defaults on property taxes, the government can claim that home.
Personal income taxes are also an add-on since the 1930s and should be eliminated. Let the corporations which get all the perks pay taxes on their corporate incomes. Then the CEOs can bring their hidden money from the foreign banks and put it back into American banks. Maybe bring jobs back too.
The only fair tax is the sales tax because it can be avoided by not buying or one can limit what one buys to only necessities.
I hope North Dakokta is successful in their attempt to restore balance to the overtaxed worker. Let the bleeding hearts kick in the share of the tax burden which the non-working dependents are not paying. Non-workers get the same benefits as tax payers. That is not fair. If we can't get people to support themselves, then we must remove the source of their free money. Eliminate welfare and aid to dependent children too. No democracy has the right to engage in charity. Let the charities support women who don't marry a working man before they have a baby. It's her responsibility to feed and educate that child, not mine.
WTG North Dakota!
The only good I could see would be forcing the state to equally apportion money to school districts. One of the inequities in education involves the differences between school districts in terms of funding due to ability to collect local revenue
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