Should the Legacy Fund be used only to grow government?

North Dakota House Republicans have resurrected an idea to use Legacy Fund earnings as a way to reduce and eventually eliminate the state’s income tax.

This is a unique idea among proposals for how to use the billions we’ve tucked away in that piggy bank in that it’s the only one which reduces the burden of government on North Dakota taxpayers.

Every other proposal – from dumping more money into our already bloated university system to building a presidential library in Medora – grows government.

That’s not to say all of those proposals are bad. I very much support the library.

My point is that if we’re not careful, the Legacy Fund could become a fuel cell for growing government.

A pot of billions and billions of dollars used to fund one project or another while North Dakotans continue to shoulder the same tax burdens.

It doesn’t have to be that way.

This income tax plan, which originated with Rep. Craig Headland, would take half of the earnings from the Legacy Fund and use them to buy down and eventually eliminate the income tax.

Gov. Doug Burgum has called this “bad policy.” He told me in an interview this proposal would make us too dependent on oil and gas revenues which are the source of the Legacy Fund’s principal.

Critics talk about the income tax being an important part, along with sales and property taxes, of the “three-legged stool” of North Dakota tax revenues.

Other critics say our state’s income taxes are already low, so there’s no need to eliminate them.

Still others are talking about other priorities we could use the Legacy Fund for.

None of these criticisms are convincing.

To Burgum’s point, this proposal would not in any way make us more dependent on the oil and gas industry. Even if all oil activity ceased tomorrow the Legacy Fund’s principal and its various investments would continue to generate revenue. That, not oil and gas taxes, would be the source of funds for the income tax reductions.

As for the “three-legged stool,” we’d be replacing over time the income tax leg with revenues from Legacy Fund earnings.

This would put no upward pressure on sales or property taxes.

North Dakota’s income taxes are low, but according to the state OMB personal and corporate income taxes generated over $833 million last biennium.

Leaving hundreds of millions of dollars in the pockets of North Dakota citizens over a two-year budget cycle sure seems like a big deal to me.

We want North Dakota to be an attractive place to live and work. Doing those things without the need to comply with a state income tax is pretty damn attractive.

As for other Legacy Fund priorities, remember all this would cost us is half of the fund’s earnings in a given biennium. The other half would be available for other priorities, be they libraries or research funding or some other initiative we cook up.

There are lots of things we could do with the Legacy Fund, but at least one of those things should directly benefit every working North Dakotan, shouldn’t it?

Rob Port, founder of SayAnythingBlog.com, a North Dakota political blog, is a Forum Communications commentator. Listen to his Talk Podcast and follow him on Twitter at @RobPort.

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