North Dakota voters yesterday rejected a ballot initiative that would have repealed property taxes in the state. The initiative, Measure 2, failed by a vote of about 40,000 (23.45%) to 131,000 (76.55%).
Measure 2 would have been, depending on the perspective, an $800 million blow to essential government services or merely the latest of a long string of taxpayer restraints on property taxation in the footsteps of California’s Proposition 13, Massachusetts’s Proposition 2-1/2, and recent property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. caps in Indiana, New Jersey, and New York. (We analyzed Measure 2 here.)
One should not, however, interpret this defeat as North Dakotans rejecting taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. relief. With an oil boom that has pushed the state’s tax revenues up 44% in one year, and an average of 9% a year over the last fifteen years, reducing tax burdens is certainly possible. Many other resource-rich states do without one of the major taxes (although all have property taxes). Here, I think proponents had trouble with their contention that the solution to bursting state tax coffers is to eliminate the funding source and source of autonomy for local government. Because the repeal effort predates the oil boom, they did not emphasize, with numbers, that the state can both fund essential government services and reduce tax burdens.
Our surveys and polls (most recent here) have consistently shown that the property tax is the most hated tax in America. And while it means you never truly own your own home (how different is it from Hong Kong, where there is no private land ownership and all homeowners pay rent to the government?), it also is a big tax that people feel and do something about if it gets bad enough. Shifting the power to tax from the counties to the state, with no net tax reduction, is a tax swap, not tax relief. The extreme example is New Jersey, which for decades has raised income taxes to pay for property tax reductions, and today has both the highest income taxes and the highest property taxes. Getting rid of the property tax is a tough case to make.
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