North Dakota to Vote on Eliminating Property Taxes

What You Need to Know

A constitutional initiative on North Dakota’s November ballot would prohibit all tax on real or personal property based on assessed value.
The repeal would cost about $1.3 billion a year, according to a preliminary estimate.
The ballot measure would undermine the state’s economic competitiveness, according to the Tax Foundation.

North Dakota voters will get to decide in November if the state will become the first without property taxes.

A constitutional initiative on North Dakota’s November ballot “would prohibit all tax on real or personal property based on assessed value (except to pay for bonded indebtedness),” according to the Tax Foundation.

The prohibition would go into effect in 2025, for taxes payable in 2026.

Property tax repeal would cost the state about $1.3 billion a year, amounting to about 12.6% of the state budget, according to an estimate from the North Dakota Legislative Council.

“Repealing the property tax is an idea with obvious appeal — but it’s a choice that could come back to haunt North Dakotans,” Tax Foundation analysts said Wednesday in a blog post.

The ballot measure “would not deliver on the economic benefits anticipated by its supporters and would undermine the state’s economic competitiveness,” the writers stated.

“There’s a genuine need for property tax reform and relief, but outright repeal of the property tax is unsound and would ultimately force a shift to more economically harmful taxes and to state control of local revenues,” according to the analysts.

The constitutional initiative, in the words of the Tax Foundation, has three main weaknesses:

moving North Dakota further away from the benefit principle of taxation, which holds that those who receive or benefit from public services should pay for them;
shifting responsibility for local revenue from local to state government; and
creating a structural fiscal deficit, nearly $1.3 billion per year, which would need to be replaced with other more harmful taxes at the state and possibly local level.

These three factors “would destroy local governments’ ability to make independent funding choices and reduce North Dakota’s overall tax competitiveness relative to other states with more stable and pro-growth funding mechanisms,” the blog post states.