Understanding the Impact of Abolishing Property Taxes in North Dakota

1. Impact of Measure 2Abolishing Property Taxes North Dakota Office of State Tax Commissioner Cory Fong, Tax Commissioner

2. Did you know that.... www.nd.gov/tax 701.328.7088 North Dakota State Tax System Like a 3-Legged Stool (2010) Collections (in Millions $) Sales/Use Taxes = $776.4 35.8% (State) Income Taxes = $576.3 26.6% (State) Property Taxes = $816.2 37.6% (Local)

3. Regional Comparison Major Taxes as a Percent of Income Family of 3 - $50,000 per year SOURCE: Tax Rates and Tax Burdens in the District of Columbia – A Nationwide Comparison 2009, Government of the District of Columbia www.nd.gov/tax 701.328.7088

4. What Do Property TaxesCurrently Support? www.nd.gov/tax 701.328.7088

5. Abolishing Property Taxes =Tax Shift Schools primarily oil/gas taxes shift to Sales Income Oil/Gas Alcohol & Tobacco Lottery & Gaming Financial Institution Other State Resources Cities Counties Townships Misc Districts shift to www.nd.gov/tax 701.328.7088

6. Impact on other Tax Rates • If property tax is abolished, • the lost revenue would need to be replaced • Sales tax rate would double Current rate New rate 5% 10% www.nd.gov/tax 701.328.7088

7. Impact on Tax Rates • If property tax is abolished, • the lost revenue would need to be replaced • Individual Income Tax rates would increase 279% over 2011 rates • Across the board increases! 2011 rates New rates 1.51% 5.72% 2.82% 10.69% 3.13% 11.85% 3.63% 13.75% 3.99% 15.11% www.nd.gov/tax 701.328.7088

8. Impact on Tax Rates • If property tax is abolished, • the lost revenue would need to be replaced • Corporation Income Tax rates would increase 720% over 2011 rates 2011 rates New rates 1.68% 13.9% 4.23% 34.6% 5.15% 42.2% www.nd.gov/tax 701.328.7088

9. Questions? • Office of State Tax Commissioner • taxinfo@nd.gov • www.nd.gov/tax • 701.328.7088 or 877.328.7088 • 600 E Boulevard Ave, Dept. 127 • Bismarck ND 58505-0599 www.nd.gov/tax 701.328.7088