Posted on 06/11/2012 2:23:49 PM PDT by Hojczyk
In the April 17 edition of Forbes, contributor Josh Barro cited an astonishing jump in North Dakota tax collections in 2011 due to the recent oil and gas boom in the northern plains state. Citing U.S. Census Bureau report on 2011 state tax collections figures, Barro said tax collections in North Dakota have soared — up 44.4 percent over 2010, all on the strength of the oil and gas boom in the Bakken shale formation. Severance taxes (taxes on natural resource extraction) leaped 65 percent from year to year and now make up 49 percent of the state’s tax collections. Other taxes were strong, too — the boom in oil-related activity has led to big increases in income and sales tax collections, he said.
“Put another way, the year-to-year increase in severance tax collections ($745 million) is equal to 172 percent of the state’s total 2011 individual income tax collections ($433 million). It sure looks like North Dakota doesn’t need an income tax anymore,” Barro elaborated.
The windfall in public revenue bodes well for a new proposal to abolish property taxes in North Dakota.
“In the last 50 years, only one U.S. state has abolished a major tax (general sales, income, or property). It’s Alaska, which abandoned its income tax after oil started flowing down from the North Slope through the Alaska pipeline. Alaska is now so flush that it has no income or sales tax and it sends an annual oil rebate payment to all of its residents,” according to Barro.
North Dakota could be next, he said.
In June, North Dakota voters will vote on a constitutional amendment proposal to abolish property taxes in the state. Barro said this would be an odd move; if passed, North Dakota would become the only state without property tax. (Seven states have no personal income tax and five have no sales tax.)
“If the property tax proposal doesn’t pass, look for the state to abolish its income tax — or, if the Bakken is productive enough, perhaps it can get rid of both,” he added.
The vote right now will not pass...Rush
Right idea wrong tax. Its the state income tax that needs to go first.
Related news in our Southern Shale
Eagle Ford banks challenged as deposits skyrocket
http://fuelfix.com/blog/2012/06/09/eagle-ford-banks-challenged-as-deposits-skyrocket/
South Texas landowners getting fat checks from oil companies for drilling on their land have been a boon to banks based in the Eagle Ford Shale.
Deposits at most of those banks have surged. The Karnes County National Bank’s deposits rocketed 110 percent to almost $168 million from the end of 2009 through the first quarter of this year.
Eleven other institutions registered jumps in deposits that ranged from 46.8 percent to 82.7 percent. By comparison, domestic deposits at U.S. banks increased 14.7 percent during the same period.
But the influx of deposits has left the Eagle Ford-area banks with something of a challenge: how to deploy that money at a time when loan demand isn’t nearly as strong.
“It’s a problem, but it’s a good problem,” said H.B. “Trip” Ruckman III, president and chairman of The Karnes County National Bank in Karnes City. Its deposits rose by $88 million from the end of 2009 to March 31, while its loans rose by $19 million.
Imagine the boost to the economy if drilling in now off limits oil fields were allowed and the Keystone pipeline and a proposed new oil refinery at Elk Point, SD (the first in 30 years) were under construction. In addition to all the new jobs and tax revenue gasoline prices would plummet. Instead we have worthless windmills blighting the landscape in the Dakotas.
“It sure looks like North Dakota doesn’t need an income tax anymore,” Barro elaborated.”
IMHO, it’s best to keep some income tax — to give everyone some skin in the game. The money can be saved and invested. Use some of it to buy Greece, for instance. Heck, buy New York ity, and make large sodas legal again.
Use a sale tax, not an income tax.
You could be right about that. The important thing, IMHO, is to not have a situation where no one has to pay any taxes. If government is entirely funded by oil bucks, then people won’t be as interested in reining it in. Rein in government, or it’ll reign over you.
“...South Texas landowners getting fat checks from oil companies for drilling on their land have been a boon to banks based in the Eagle Ford Shale....”
I work in the Eagle Ford. I see it everyday. It’s amazing.
It reminds me of what I read about the Alaskan Gold Rush in the early 1900s. Where once was a cattle field, in 6 months is a new hotel, resturant, etc. etc. You know the boom has hit when the Ford Dealership in the little town of Kenedy, TX had a Shelby Cobra on the showroom floor....and, of course, there are the “ladies of the night” as well. :)
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