President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising...
- Measure 2 Has Potential to Enhance North Dakota's Economic Com...
Measure 2 Has Potential to Enhance North Dakota's Economic Competitiveness
Income Tax Cut Initiative Could Improve State's Ability to Keep and Attract Jobs, Investment
Washington, DC, October 20, 2008 - The cuts in North Dakota's individual and corporate income tax rates in Measure 2, an initiative on the November 4th ballot, could improve the Peace Garden State's ability to keep and attract more jobs and investment, according to a new report released by the Tax Foundation.
In Tax Foundation Fiscal Fact No. 151, "North Dakota's Measure 2: How Would Rate Cuts Affect the Peace Garden State's Competitiveness," Tax Foundation Tax Counsel Joseph Henchman suggests that passing the initiative, which would lower individual income tax rates by 50 percent across-the-board, and corporate income tax rates by 15 percent, could make North Dakota more economically competitive.
"If North Dakota moves in the direction of lowering tax burdens without undermining government services, there is a strong likelihood that better economic performance will follow," Henchman explains.
Unlike most states, North Dakota's government has enjoyed years of strong budget surpluses, an impetus for the initiative. If Measure 2 passes, the individual and corporate income tax revenue in the 2009-11 budget are projected to be $605.2 million, a nominal increase of 25 percent from the 2001-03 budget, suggesting that Measure 2 can be afforded. While taking no position on what the optimal amount of government spending should be, Henchman explains that rate cuts are preferable to using surpluses to send rebate checks to citizens or to promote "economic development."
"A lower tax rate gives workers and entrepreneurs more incentive to innovate, invest and earn," says Henchman. "State lawmakers are often tempted to lure business with lucrative tax incentives and subsidies instead of pursuing broad-based tax reform and creating an inviting climate for all businesses. A far more effective approach is to systematically improve the business tax climate for the long term."
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937, and therefore does not advocate for or against passage of Measure 2.
The study can be found at http://www.taxfoundation.org/legacy/show/23793.html.
To schedule an interview to discuss the Tax Foundation's study of North Dakota Measure 2, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.
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