MINOT — Rep. Ben Koppelman supports Measure 4, the constitutional measure that, despite widespread reporting, would not abolish property taxes but only prohibit our current ad valorem tax on real estate value. Koppelman, a West Fargo-based disciple of Measure 4 organizer Rick Becker who aspires to be the next House Majority Leader in Bismarck, doesn't seem very confident that the measure will pass.
He was in Minot recently at a gathering hosted by the Center for the American Experiment, described by the Minot Daily News as a Minnesota-based "think tank," though it can be hard to discern how much that group's work product has to do with thought. That group, in an attempt to influence North Dakota's legislative races, has been touting ratings for North Dakota lawmakers that punished them based on their propensity for bipartisanship, a metric with all the substance of fairy dust and unicorn meat. But back to the matter at hand.
At this event, Koppelman, tacitly expressing doubts that Measure 4 will succeed, tossed out some ideas for property tax reforms for lawmakers to implement should voters reject the ballot proposal. Among them? A tax on property size instead of value. ADVERTISEMENT “How many square feet is our building? How much square feet is your land? Does it really matter if your house is built in 1960 and mine is built in 2020 and we both need the same police, fire protection and streets? I think not,” Koppelman told the audience in Minot.
“Why would we tax me more or you more depending on if we make it nice? If we continue to penalize repairing things and making them better, then we’re going to need more economic development and more Renaissance Zone-type stuff to repair the damage we’ve done from the inverse encouragement in the current system.” Koppelman's point about the current property tax providing something of a disincentive for home improvement — under the current model, the more your property is worth, the higher your tax bill will be — is not an unreasonable one. But is the solution a tax that would charge the owner of a 1,200-square-foot, 120-year-old fixer-upper in a bad neighborhood the same as a brand-new, 1,200-square-foot luxury home in a shiny new development? While this might have the virtues of the sort of superficial egalitarianism populists like Koppelman find appealing — we all "need the same police, fire protection and streets," he says — the ramifications for young or low-income homeowners aren't great.
I like a flat tax code, and I believe that everyone should have some skin in the game when it comes to paying for our government, but I also know that life is a ladder, and we don't need to be putting grease on the lower rungs. I bring up Koppelman's idea — which could be implemented even if Measure 4 is successful, remember — to illustrate a couple of points in the property tax debate. The first is that voters approving Measure 4, convinced that they're "abolishing property taxes," may well find themselves out of the frying pan and in the fire.
They would be getting rid of one property tax regime, only to perhaps see it replaced by another even more confounding. A change from a tax on value to a tax on size, as Koppelman proposes, would replace an old consternation with a new one while also doing nothing to address what drives property taxes too high in the first place, which is local spending. This is the second point.
Most people's complaints about property taxes aren't predicated on the structure of the tax. Most people aren't so much upset about what's being taxed (the value of the property) as they are about the size of the bill they're receiving. We talk about this issue as if it were a tax problem, and it's not.
It's a spending problem. A complicated one because it's spread out over so many taxing jurisdictions (school districts, park districts, counties, cities, etc.), and a fraught one because so much of what drives our property tax bills is spending on schools and first responders and vital local infrastructure that is hard to argue against.
ADVERTISEMENT This isn't to say there isn't plenty of fat in local budgets that could be cut. Only that those debates are sprawling and complicated, so it's easier to talk about the way we're taxed instead of the complicated spending regimes that are driving our tax bills. No matter what we do with the property tax, it's not going to change the spending.
We'll only see the burden of that spending hit us in different ways, whether it's shifted to our state budget, where it will be supported by our statewide taxes, or put on a new type of local property tax..
