This week, the North Dakota legislature is back in Bismarck for a special session primarily aimed at reworking a major budget bill that was sent back by the state Supreme Court. Governor Burgum is calling for additional income tax reform to be a part of the session.
Since regular session ended, and the passage of significant income tax cuts during that session, the state has announced it hauled in a record $1.49 billion surplus at the end of the last fiscal year.
The Governor’s office highlighted that the current surplus is $288 million above the projections the legislature was working with in April when final negotiations on landmark income tax reform were completed. This opens the door for more income tax relief.
Leading into regular session, Governor Burgum and many House members championed simplifying and lowering the state income tax to a flat 1.5% rate. A plan Americans for Tax Reform strongly endorsed, and testified in support of.
Ultimately the legislature achieved a significant tax cut package that reduced the state’s four income tax brackets down to a 1.95% lower bracket and a 2.5% upper bracket. The upper bracket is one of the lowest top rates in the nation among flat or graduated income tax states.
The massive, record surplus provides an opportunity for the legislature to advance additional tax cuts, which could include the 1.5% flat tax plan that the House passed in regular session. Currently the only bill on the table would expand the number of North Dakota taxpayers who pay no income tax, a solid tax cut. Governor Burgum has offered support for that proposal and urged legislators to bring tax cuts into the special session.
Burgum said, “This proposed tax relief would allow North Dakota workers and homeowners to keep more of their hard-earned money in their pockets so they can invest it in their families, their communities and themselves … When state revenues far exceed expectations, tax relief should always be on the table, and we urge the Legislature to reconsider this proposal.”
North Dakota legislators, and especially the House, have led on efforts to cut, flatten, and eliminate the state income tax. With record revenues, and even greater surplus than expected, Governor Burgum is right, continuing the path to zero income tax should be on the table in special session.