(The Center Square) - North Dakota Gov. Doug Burgum touted his income tax reduction plan to a House committee Wednesday, telling lawmakers the state was in a financial position to enact the cuts.
Burgum's plan would create a flat tax of 1.5%. Sixty percent of taxpayers would not pay anything, while those who pay would see a 26% to 48% reduction in their taxes, according to the bill.
The state's revenues are running $700 million ahead of forecast and oil tax revenues are running $1.5 billion ahead of forecast, the governor told the House Finance and Taxation Committee.
"When the state's doing well, of course our citizens should share in that prosperity and especially those citizens who are working and earning income in our state," Burgum said.
Reducing the state income tax would also help the state compete for workers, Burgum said.
Several public interest groups, including the Greater North Dakota Chamber of Commerce, the Rough Rider Policy Center and Americans for Tax Reform, backed the governor's plan.
The International Union of Painters and Allied Trades also supported the bill.
"Our support for your bill is not a union or non-union matter, it is about hard-working North Dakotans getting the tax relief they need and deserve right now," the trade association said in a statement. "With the price of gas, food, day-care, clothes, you name it, going up right now – our members strongly believe the pinch on middle class families has reached a breaking point. By eliminating income taxes for a large portion of North Dakota taxpayers, it will put money in their family budgets right away and provide them with ongoing saving they can count on."
The state will lose more than $566 million in revenue during the 2023-2025 biennium if the bill is approved by lawmakers, according to the bill's fiscal note.
Rep. Zachary Ista, D-Grand Forks, said $188 million of the tax relief package would provide breaks to filers making more than $491,000 a year.
"What policy goals are we furthering by giving $188 million in tax relief to folks in that tax bracket," Ista asked the governor.
"In this plan, as we talked about, nearly 60% of all North Dakotans will pay no income tax," Burgum said. "That means the remaining income tax will be paid by the top 40% of the filers. But this concept that you can't give tax relief to people that have the largest incomes, if you believe that you are never going to get to a zero tax relief."