North Dakota Could Eliminate Property Taxes

Update, 6/12/12, 8:25 p.m. Pacific time:  The returns are in, and the proposal to eliminate property taxes in North Dakota has been defeated, according to the Associated Press. The opposition campaign was led by teachers unions and local governments.

Today, the voters of North Dakota will get a chance to do what most of us can only dream of — eliminate property taxes.

Predictably, politicians, business lobby groups and unions are all against such a drastic move, but what’s putting the goal within reach of long-time anti-tax proponents is the state’s oil boom.

Rather than shrink from developing its resources as so many states have done in this “green” era, North Dakota is producing 575,000 barrels of oil daily. In 2006, it was the ninth largest oil producer among the states. Now it’s No. 2, and it’s projected to soon be challenging Texas for the No. 1 spot.

The oil boom has worked wonders for North Dakota’s economy. The state is flush with money, jobs and a rising standard of living, which is more than can be said for states like California that have turned their back on real energy development in favor of “renewable” energy, which is mostly proving to be a dead end.

The boom has brought waves of new jobs to the state and resulted in unprecedented development and housing construction as cities scramble to make room for the newcomers.

It’s not all puppies and roses, however. Some property owners don’t necessarily have the mineral rights to oil under their own land, which has led to some instances of oil wells being drilled against property owners’ wishes.

On the plus side, because much of the drilling has occurred on private property, it has largely kept the Obama Administration from crashing the party.

However, the environmentalist crowd has been lobbying to get the hydraulic fracturing, or “fracking,” technique of oil production banned, claiming damage to water tables and general badness. Considering the oil industry has been fracking for a half century without any of the catastrophes environmentalists now claim to be alarmed about, it’s obvious the real goal is simply to prevent fossil fuel use and block economic development.

Fracking is also expensive. It’s highly profitable for now because of a combination of new technology and unreasonable prices for oil.

But for the moment, North Dakota is golden. Its property tax brings in about $800 million annually, which starts to look like a pittance in light of the $2 billion projected from oil revenue over the next two years.

In a country where the federal government claims monthly unemployment over 8 percent as a sign of improvement and middle class families have seen 40 percent income drops since 2007, North Dakota boasts communities where up to nine jobs go unfilled for every existing working resident and family incomes have increased 130 percent over the past decade.

So voters find themselves with a rare opportunity to rid themselves of a burden that has been on their shoulders since the 1800s. If voters repeal the tax, North Dakota will be the first state since 1980 to eliminate a major tax.

And it’s all thanks to the power of oil and free-market capitalism.