A lot of people in the U.S. are unhappy with their rising property taxes, which are caused by the real estate market getting more expensive. But next month, North Dakota voters will have a chance to do something about their anger by getting rid of property taxes and making it illegal for counties, towns, and other local governments to charge them.
North Dakota would be the first state in the U.S. to no longer have property taxes if the bill passes. Property-tax sceptics say that if it passes, it could also make the push to get rid of the tax in other places stronger. States like Texas, Nebraska, and Michigan have talked about the idea. But politicians in the Great Plains and Mountain West states say big changes need to be made right away.
Rick Becker, who led the group that put Measure 4 on the North Dakota state ballot, says property taxes are the “worst and least moral of all the taxes.” He said that the ballot bill would get rid of property taxes on homes, businesses, and farms.
He said that these taxes use complicated maths to make people keep paying for things they already own. He also said that they are based on the home’s “unrealised” paper value.
A “yes” vote is a win for Becker in and out of the state. “That’s when the light goes on for a lot of people.” He said, “Once a state steps outside that box, the other states see that it is possible.” “The sky didn’t fall, so we might as well try it.”
Chad Oban, who leads the coalition against the ballot measure called Keep It Local, said that property taxes need to be fixed, but not with a “sledgehammer approach.” Utility companies, farmers, school districts, business groups, and law police are all part of the group.
Oban said, “I think we’re going to lose Measure 4.” “But I think if it passes, a lot of other states will do the same thing or feel like there’s a political appetite for it.”
But Oban said that “if North Dakota—ruby-red North Dakota—thinks it’s a bridge too far,” it might make other people change their minds about trying to get rid of the tax. He said that the bill lets state lawmakers decide where the next money for schools, parks, and roads will come from. “To be honest, if it passes, it will cause chaos.”
A poll of 500 North Dakota voters done in late September for the state news outlet North Dakota Monitor found that 41% of voters are against the ballot measure and 28% say they will vote for it. The study found that one-third of voters still hadn’t decided.
Same plan, growing anger over rising property taxes
In 2012, North Dakota voters easily turned down a plan to get rid of the state’s property taxes. Becker and Oban both said that the current plan comes at a time when people are more angry.
Municipalities across the country collected $363.3 billion in property taxes from single-family homes last year, according to Attom, a real-estate data-analytics company — a nearly 7% annual increase. Atom said that the average property tax bill went up by 4% to more than $4,000.
According to Attom data, homeowners across the country had to pay an effective tax rate of 0.87% on the estimated market value of their house. North Dakotans paid a higher-than-average rate of 0.99%, but it was still a lot less than what people in Illinois, New Jersey, and Connecticut paid.
A poll done in December 2023 by the University of Chicago Harris School of Public Policy and the Associated Press NORC Centre for Public Affairs Research found that 69% of people say their property taxes are too high. This is a slightly higher percentage than the 67% of people who say their federal income taxes are too high. The poll found that 60% of people think their property tax bill is unfair.
People’s property taxes have gone up because their homes are worth more, but Jared Walczak, vice president of state projects at the Tax Foundation, a centre-right think tank, said they don’t feel like they’re getting the same level of services. He pointed out that cities and towns still get more tax money from rising property prices even when they keep their property tax rates the same.
“In some ways, it’s been opportunistic,” he said. “That’s why a lot of homeowners don’t like it.”
Property tax anger isn’t new, Walczak said. With Proposition 13, voters in California famously stopped property tax increases in 1978. There are also many types of tax breaks in each state that are meant to help people with their property taxes, especially older people.
Walczak said that there has been talk of getting rid of property taxes for a long time. “It’s one thing to have this ongoing low murmur; it’s another thing to have it start to bubble up to the surface,” he said. “That looks like the way we should go now.” Still, while there are good justifications to reform the tax, “none of this is a good reason to repeal the property tax,” Walczak said.
Karla Wagner, executive director of the organization AxMiTax, led an effort in Michigan this year to get a property-tax repeal on the ballot. Wagner said that her group would try again because the first attempt didn’t get enough signatures.
Wagner says that the taxes make things even worse for people who are already busy. “Which is more important: pickleball courts or someone}s house? Don’t waste our money on useless things. Stop taking our homes away when we can’t afford our bill,” she said, referring to the state’s tax-foreclosure laws.
If they catch on, repeals are “going to spread like wildfire,” Wagner said. Approval of the ballot measure in North Dakota, she added, would be “the gas on the spark.”
What could happen with Measure 4
The text of Measure 4 says that it would “require the state to provide replacement payments” to the local governments at a rate that is “no less than the current real property tax levies.” According to the plan, it could cost the state $3.15 billion over two years.
North Dakota Gov. Doug Burgum, a Republican, says that the effects of Measure 4 are a good reason to vote “no.”
“You’re going to make someone else pay for it.” That’s the point of this whole thing. Who is going to pay for it? The radio news station Prairie Public reported that Burgum said in August, “It doesn’t lower the cost of delivering anything in our state.”
When asked for a comment, Burgum’s office did not answer.
Becker is a Republican who used to be a member in the state’s House of Representatives for ten years. He said the state can afford the change if it makes better budget decisions. He said that counties, towns, and cities need to figure out how to pay for things that the state doesn’t cover. One idea is to come up with ways for companies and residents to pay their fair share of these costs.
Some people are against the plan because they say it will take away local control over spending decisions. Becker responded that the method still gives local people control, but not with a tax based on a property’s assessed value. As a result, he said, the details of the next steps the legislature will take are not part of the state constitutional measure. Instead, those are up to the elected lawmakers.
An economist in Texas named Vance Ginn said that state and local governments should get rid of property taxes because they are “immoral forms of taxation.”
Ginn, president of an economic consulting company whose clients include conservative think tanks like Americans for Tax Reform, says that changes to sales taxes and curbs on spending could help.
Ginn said that he generally backs Measure 4, but he is worried that there “isn’t a tangible path forward.” If the vote fails, it will teach people that in the future when they try to undo something, they need to come up with very clear funding options, he said.
Even so, Ginn said, “what North Dakota is doing is helping to drive the narrative for the need to do something about property taxes.”
Walczak thinks that it would be “far more painful than a property tax does now” to switch to other taxes. He is watching the North Dakota vote to see what will happen and what might happen next.
He warned, “It’s likely to go very badly, and it might be hard to fix.”
