North Dakota Gov. Doug Burgum suspended his presidential campaign but he has sent a lasting message to all Republican governors and state legislative leaders with his leadership in passing landmark tax reforms and calling to eliminate the state income tax entirely.
Earlier this year, House and Senate leaders agreed to major tax cuts with House Bill 1158, saving North Dakota taxpayers $358 million annually on their personal income taxes. The state reduced five income tax brackets down to two, with a reduced 2.5% top rate – tied with Arizona for the lowest rate among states that impose an income tax.
At the bill signing press conference, Burgum said, “We have other work ahead of us in addition to getting to zero on income tax,” reiterating support for putting North Dakota on the path to zero.
North Dakota has leapfrogged to join at least 10 other states that have plans to eliminate their income taxes, including Iowa, Arkansas, and West Virginia.Since 2020, more than two dozen state income tax cuts have been enacted, and that number is increasing as more states join the movement.
North Dakota is now among these leaders thanks to Gov. Burgum and the stalwart leadership of House Republicans, particularly Rep. Craig Headland, who have kept pushing for tax reform, passing a measure in 2019 to eliminate the income tax and originating the tax reform bill this session.
Tax-cutting states are following the good example set by the seven no-income-tax states like Florida, Texas, and South Dakota. States that are winning the competition for people, jobs, and economic growth.
From April 2020 to July 2022, the 15 lowest-tax states gained 2.3 million people, or 2.2% of their population. The 15 highest-tax states lost 1.2 million people or 1% of their population. Texas and Florida increased their populations by 1.6 million people combined.
Among the loser states is North Dakota’s neighbor Minnesota. With one of the highest state income tax rates at 9.85%, the state lost more people from 2021-22 than it had in three decades.
As the effort to get to zero continues, Burgum recently called for more tax relief during an October special session aimed at fixing technical issues with budget legislation.
North Dakota is in a great position to keep cutting taxes and reach zero faster than other states.
For one, the state continues to take in more tax dollars that projections, raking in $288 million more than expected over the course of the last biennial budget.
North Dakota’s income tax makes up less than one tenth of general revenues. Among the 50 states, 40% of all state revenues came from income taxes in 2021. North Dakota has a tax with fewer constituencies, making it easier and more urgent to cut more sooner than later.
The state also has a $9 billion “Legacy Fund” from oil and gas revenues that is intended to maintain budget stability over time. Predictably, the state could not help but start tapping this money to pay for general spending.
North Dakota taxpayers are paying more than needed to operate government, and that money should be used to permanently reduce their income tax burden. The state is in a great position to lead the race to zero income tax with Republicans in charge and a Governor committed to cutting taxes. That achievement would really put North Dakota on the map for investment and Americans fleeing high-tax states like Minnesota.
With committed pro-taxpayer leadership, the future is looking smoother for the Roughrider State, now a model for other states.
Grover Norquist is president of Americans for Tax Reform.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation or the Tampa Free Press.
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