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North Dakota voters to decide on abolishing property tax

By Dennis Cauchon,

Posted June 13,2012

North Dakota voters will decide Tuesday on the ultimate tax revolt: abolishing the property tax altogether. A citizen-led petition drive has put the daring, all-or-nothing proposal before the voters in a state flush with tax revenue, jobs and prosperity generated by an oil boom.

If the property tax is eliminated, it would be the first time since 1980 — when oil-rich Alaska got rid of its income tax — that a state has discontinued a major tax, reports the Tax Foundation, a non-partisan research group. North Dakota would become the only state not to have a property tax, a levy the state has had since before it joined the union in 1889.

“The oil boom makes it easier to get rid of the tax, but we started this before the oil boom took off,” said Charlene Nelson, chairman of Empower The Taxpayer, which is leading the tax repeal effort. “Any state would benefit from this same thing.”

North Dakota’s political and business establishment has lined up against the measure. The state Chamber of Commerce, farm groups, unions and most elected officials are opposed.

The property tax generates about $800 million a year in North Dakota. Except for a small share for a state medical school, the money is collected by counties and used to fund schools and local governments.

“The property tax is the foundation of local government services,” said Connie Sprynczynatyk, executive director of the North Dakota League of Cities. “It’s the predictable source of revenue to pay for police and fire and other local services in the community where you live.”

Measure 2, as the proposal is called on the ballot, would require state government to make up for property tax revenue lost by local governments but doesn’t specify how. Sprynczynatyk said this vagueness makes it uncertain if the measure can be implemented.

North Dakota’s attempt to banish the property tax reflects the sparsely populated state’s streak of independence and populism.

Despite hot political rhetoric, governments and voters generally tinker with long-established taxing habits — raising and lowering rates, adding and removing tax breaks — rather than attempting radical change. California’s Proposition 13, a voter-approved initiative in 1978 that started a nationwide effort to limit property taxes, slashed property tax rates and limited future increases but did not end the tax.

Property taxes date to the 19th century in most states, including North Dakota.

The property tax is the most unpopular of all taxes, according to polling by the Tax Foundation.

Nelson, the tax opponent, hopes North Dakota starts a brush fire elsewhere to end – not just lower — the property tax. “The problem with reducing a tax is it’s like a weed. It always grows back,” she said.

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