North Dakota Considers Eliminating Property Tax

North Dakota's 2012 ballot measure to eliminate property taxes entirely — replacing them with unspecified alternative state revenues — was the most radical property tax proposal considered by any American state in recent memory, testing the limits of anti-tax sentiment in a state that had been transformed by the oil boom into one of the nation's wealthiest per-capita jurisdictions.

The measure, Measure 2, was placed on the June 2012 ballot by petition and would have eliminated all property taxes on homes and businesses, requiring the legislature to find alternative funding for the schools, counties, and municipalities that depended on property tax revenue.

Supporters argued that property taxes were fundamentally unjust because they could eventually force people — particularly elderly homeowners on fixed incomes — out of homes they owned outright. The obligation to pay taxes on property one owns represents, in this view, a form of permanent government claim on private property.

Opponents, including most of the state's local government officials and school administrators, argued that the measure would devastate local government funding without providing any mechanism for replacement. Property taxes in North Dakota funded roughly two-thirds of school district revenue. The legislature would be under no obligation to replace the funding, and the state's track record of maintaining local government support at required levels was offered as evidence of risk.

The measure failed, 76 percent to 24 percent — a margin that suggested the anti-property-tax sentiment, while genuine, had not persuaded most North Dakotans that eliminating the tax was workable rather than merely appealing as an idea.

The underlying frustration that drove the petition effort, however, reflected a sentiment that is not unique to North Dakota.

Source: Tax Foundation and the 2012 United States ballot measures record (Measure 2 failed 76.54% to 23.46%, June 12, 2012).