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North Dakota may abolish property tax

Next summer residents of the state will vote on a constitutional amendment to eliminate tax on real estate.

By MSN Money Partner Oct 18, 2011 5:31PM

This post comes from Kay Bell at partner site Bankrate.

 

Bankrate on MSN MoneyNobody 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.

My view

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:

49Comments
Oct 19, 2011 3:17AM
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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.

Oct 19, 2011 7:44AM
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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!!!!!!!!!!!

Oct 19, 2011 7:05AM
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why are retired older people paying taxes in the first place? they should not have to pay for school taxes.    they have paid for their entire working years and now are on pension . their income is much less  and in some cases on the poverty level and still property taxes rise or are so high that it takes a major portion of their meager retirement income to pay for these school taxes   it is time for those who are retired to stop paying for those taxes and the ones who have children  to pay a bit more   . i also see in my tax bill a fee for technical  school   these people go there  and should pay their own way   not be subsidized by the retired taxpayer  . it is also time  for our country to deport all those who are here illeagally and take their children with them  this is a mulit billion dollar cost to taxpayers   in each state   including anchor babies  they came here with their illeagle parents so they are illeagle too   
Oct 19, 2011 6:58AM
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Want kids? Fine. Then you pay for their education. Stop sucking money out of me. My wife and I are in our late 60's. Never had kids, obviously never will. We 'stopped' working because we were both laid off a couple years ago. Fortunately had saved up enough and with soc. sec. we are OK. But the local school board won't stop. Our school property taxes went up to pay for a new athletic complex - track, tennis courts, etc. (And for an exorbitant raise for the superintendent and his staff of sycophants.) Not for books or computers. And now that it appears that soc. sec. will get a COLA increase, we can expect our local school board to raise taxes again. Why let the people keep it? The county property tax is OK. Supports among other things the old age home where I may end up some day. But the school property tax - to pay for other peoples' brats? No way. If I buy a car do I ask you to pay for it? Pay for your own kids..
Oct 19, 2011 3:09AM
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Good for the people of No. Dak. They will vote out property taxes. Many are getting tired of paying huge salaries to so-called officials. However, this probably means that if the property taxes are eliminated. Then, taxes will increase on everything else. Someone's got to pay the huge salaries, one way or the other. Next step....eliminate the officials!!!!
Oct 18, 2011 11:25PM
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RE:prop. taxes.  Each state needs to tend their own business.  In doing so they are also responsible for their own debts and overspending.     If every state was responsible to a balanced budget,  we would NOT be in this financial mess.
Oct 19, 2011 7:11AM
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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.

Oct 19, 2011 7:37AM
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Never happen here in the tax capital of the US of A, New York State, our gov little Andy just passed a law which caps the tax increase to 2%. And you can't imagine the moaning and crying the unions are doing. If you want to see what the future holds for the rest of the country just visit here, this is what happen when you have an out of control public service sector. They get a no lay off clause in their contracts, salary increases every year, free health care, and pension to die for. The average 20 year teacher here makes over 100k per year, retires with a 75k pension at 55, and has free health care for them and their wife/husband until they die. They take a portion of their mandatory dues, clean the money send it to the Democrats, who make sure no reform every happens. The unions then vote lock step for any Dem on the ballot and the circle of life in a big blue state is complete. Our roads are falling apart, our kids are some of the dumbest in the country, but the public service union keep getting fatter and fatter. So boys and girls what did we learn today, well for one thing stop voting for Democrats is a good start.
Oct 19, 2011 6:58AM
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I am a home owner that pays every year. I have no children. I feel those of us that went to public schools need to at least put back what we have used. After 13 years of paying for schools you should should become exempt from the school tax. This would cover the K-12 time span. The families with more children should pick up there own slack.
Oct 19, 2011 4:07AM
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Loved how the writer throws in the scare tactic about funding for school districts... They (politicians) always have something which will loose money that affects the common people and school district funding affects everyone... However, from what I have seen in these United Socialist States of America thus far it is only as I have said something to scare the people from voting out the tax and a reason; that should they vote it out; to increase the taking of money from the people in other areas.  Why do I say this... First and foremost... Do you ever hear about them cutting their salaries? No only the police, fire, teachers, etc etc etc get their wages cut while the politicians get more and more raises and spend more and more on extravagant items so they look more important... Second... Way to many school districts have gone to a pay to play system where the parents must pay for their child to be in any sport or extracurricular activity.  They will tell you it's for uniforms and such but since when does a middle school or high school need to get new uniforms each and every year... When I went to school we had the same uniforms that were worn 10 years before and they worked just fine, you're out there to participate not make a fashion statement.  My senior year we got new uniforms and to get those we (the coaches and kids) did fund raisers (bake sales, car washes, drawings for cash and prizes etc.).  The books were always up to date unlike the ones I see my children bringing home now which have wrong answers in them and misinformation because they are actually out of date and the school says they can't get new ones because they are too expensive, well since politicians want to be in all aspects of our lives then they should start caring about the children and make these book companies quit charging exorbitant  prices for school books (all school books, K-12 as well as college books), start regulating that then the people of North Dakota may not have to worry so much about getting hit hard when the oil boom dies down.
Oct 19, 2011 3:13AM
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By elimination,.I mean drop their salaries to minimum wage, paid on a weekly basis. Then you'll see how true they are to the people, and the country. If they don't agree....fire their asses!!
Oct 19, 2011 7:48AM
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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!

Oct 19, 2011 7:26AM
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What a shock, they decide to drill for oil.  Create a HUGE revenue stream and now the people have less taxes to pay.   WHO would have thought of that????  Who would block such an insanely obvious idea.   I am sure somewhere some little bird or insect was harmed in the drilling process and the tree huggers would say that it shouldn't be done but i say lets VOTE on if we should drill or not.  Less taxes, cheaper gas and heat, more people working so more income taxes for the government to keep going.   ANYONE see any negatives with this????
Oct 19, 2011 6:18AM
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As a firm believer in once you pay for a plot of land, whether it be an acre, several, or a simple lot. If you paid for it, it is yours. Period.No other sumbitch deserves a dime, or anything. Now if it's in the banks hands or other financier....obviously that's another senario. Well, I paid cash for 18 different properties in the state of Arizona. The last five years since I've had it I refuse to give these croanies a penny. Screw 'em. I haven't any children in school. I could care less what they build, in as far as schools, prisons, various infractures, and so on. What I will not accept is the fact that these so-called officials, high school drop-out, druggies, whores, primed by parents, etc; cannot prompt me to give them a damn cent. If they want the property....then take it!. Before or after, they still won't get another dime from me. I don't give a damn what they want. I don't need them. Neither do you. Eventually, I know that they will put a lien against it all, but at my age.......screw them again!!!
Oct 19, 2011 7:52AM
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The ND tax department estimates that if property taxes are eliminated the state will lose 800 million in revenue. It would be the job of the ND legislature to determine how that income would be replaced.  Getting rid of property taxes will (in my opinion)  merely mean higher taxes in other areas.  As a lifelong resident of ND I predict property taxes will remain.  Better the devil you know than the devil you don't 
Oct 19, 2011 7:08AM
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Yea, you guy's are right, The places where taxes are highest ie. Detroit and Washington DC are truly "safe, happy places). Of course we all know that the higher the taxes the better the schools. We need to encourage more people to leave welfare by taking more of their paychecks to   provide for the people who don't want to work.  Only by taking the maximum money from the middle class workers can you have wealthy "poor" people. Jeez, how come you people don't get that.
Oct 19, 2011 6:28AM
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My kids are out of school. They have been for 20 + years.I paid dearly during that time. Now it's time for the others to pay. If you don't like it....then homeschool them. We didn't have that option in the late 70's. As it stands now, I don't give one good damn whether your kids get a education or not. That's your problem.
Oct 19, 2011 7:55AM
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Army 1971: What would happen if all concerned ctizens of N.Y. told them to go to hell? What are they going to do, arrest all 1.5 million people +? You people need to stand up, and tell them like it is! If you don't, it will just get worse in the long rum. If we could only get three people to agree on the same issue....then this country wouldn't be in the shape it's in at present.
Oct 19, 2011 7:15AM
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  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

Oct 19, 2011 8:16AM
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I for one will sell my house and move to North Dakota if this passes, obviously to find the funding they will need to increase sales taxes, and make corporations pay more, since this would be a boom to North Dakota having more people move in state, then business's would want to be where the people are, I don't have a problem paying taxes, as a matter of fact we do home school our 4 children, with my senior in Post Secondary, which I may add she is smarter than most of the 3 year students, and I gladly pay my property tax, but even this author has the attitude of the government when he states that "don't do this", or "Don't nuke the system" with this mentality, nothing will ever be tried, it will just continue to be that we have created this beast and we need to keep feeding it.
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