In a spectacle long time observers say they have never seen, the North Dakota House of Representative has fast tracked a massive tax increase through its chamberwhich could turn out to be the largest tax increase in North Dakota's history (on a dollar basis).
On a 57-23 vote, the House pushed HB 1476 though with little to no committee discussion. The hearing for the bill was this morning from 9am to noon, and by 6:30pm this evening the House passed it.
While the bill is being sold as a "flat tax" reform, in reality it is a tax increase followed by a reform because it relies on the "big trigger" being pulled on oil prices.
As I wrote last week,this plan is very flawed. And the discussion in committee was more about the lack of money at the state level than reforming the tax code.
This is a money grab. This tells oil companies that have paid the oil tax that the state had benefited from that the state needs more tribute before their taxes can be reformed.
There is no reform unless the gross production tax would have triggered to 0%, and if that trigger happens, the rate will go to 4.5% instead of zero.
When taxes go up instead of down, that is a tax hike - and whether or not the long term rate is better is not really relevant because the tax hike came first.
It will be interesting how the industry reacts to be asked to bail out the state when it is going through hard times.
The state has spent too much over the past eight years, HB 1476 is the legislature finally admitting that fact.
