WOULD MEASURE 2 BE AN INCENTIVE FOR INDUSTRY TO LOCATE IN NORTH DAKOTA?

We know that tax and regulation plays a significant role in business decisions.  We also know that all taxes and regulations are a disincentive to production.  We know government can provide significant services and benefits necessary for an orderly and prosperous society.  Taxes are the tool government must use to provide the services and benefits.

The question isn’t whether or not we should or shouldn’t have government and taxes.  The question is which taxes will do the least harm to our overall economic wellbeing while allowing government to best perform those services that facilitate a healthy and prosperous community.

Property taxes are the most harmful and least positive means of raising revenue.  Study after study confirms this.  We have found no study or argument, whether philosophically or economically based, contending property taxes produce more good than harm compared to any other tax. 

The question presented here is: Would passage of Measure 2 provide an incentive to industry to consider locating in North Dakota?  Follow up questions might be:

·         How would that incentive be measured?

·         Would this incentive be sufficient to actually attract industry to locate in North Dakota?

Abolition of property taxes would not provide the same incentive to all types of businesses.  However, those that require high dollar investment in real property would, without question, seriously look at the benefits of locating in the only state that has no property tax. 

While it isn’t possible to guarantee what industry decision makers would actually do we can clearly demonstrate savings that would inure to a company that invested in a facility where there were no property taxes.  

To illustrate, we know that South Carolina’s property taxes are .5% of property value annually (5^th lowest in the nation). South Carolina is experiencing significant business locations to their state.  North Dakota’s property tax rate is 1.42% of property value annually (10^th highest in the nation).

NORTH DAKOTA		SOUTH CAROLINA
Facility Investment	$500,000,000	Facility Investment	$500,000,000
Annual Tax Rate	.0142%	Annual Tax Rate	.005%
Annual Tax	$7,100,000	Annual Tax	$2,500,000
Tax Over Amortized Life of Facility (40 years)	$284,000,000	Tax Over Amortized Life of Facility (40 years)	$100,000,000

Today, North Dakota is at a $184,000,000 DISADVANTAGE compared to South Carolina in property taxes.  After passage of Measure 2 North Dakota will have a $100,000,000 property tax ADVANTAGE since its property tax burden will be ZERO. 

Will Measure 2 guarantee industry would locate in North Dakota?  No.  However, we can guarantee that every industry in the U.S. and many more around the world would take a serious look at North Dakota as a location to locate.  We can say with a great deal of certainty few if any industries are currently taking a serious look at North Dakota.  And we know the first and most critical step to attracting industry is to get it to take a serious look.  We believe that all the other incredible things about our State will result in more than just looking.