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1 Mark Robyn, Recommendations for North Dakota's Tax System 1 (2012)

handle is hein.taxfoundation/ffcjcxz0001 and id is 1 raw text is: FOUNDATION February 16, 2012 No. 292 Recommendations for North Dakota's Tax System By Mark Robyn Introduction At the request of the North Dakota Taxpayers Association, we offer a list of recommendations to improve North Dakota's business tax climate. The recommendations are derived from our State Business Tax Climate Index, which we produce annually to enable business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare according to the economic principles of simplicity, neutrality, and broad tax bases with low tax rates. The states that score best in the Index are those that embrace the established tax reform approach of broadening the tax bases and lowering the tax rates. Reforms along those lines can of course affect revenue totals. While we recommended specific base-broadening changes, we have not included any specific corresponding rate reductions in the analysis, for two reasons. First, state revenue officials are better positioned than we are to estimate revenue effects. Second, North Dakotans must decide for themselves whether they want tax reform to raise the same amount of revenue or reduce revenue. All Index rank changes listed in this analysis represent what the effect would have been had North Dakota had the relevant change in effect on July 1, 2011, the first day of the standard state fiscal year and the snapshot date for the 2012 Index. If all of the changes listed below had been in effect on July 1, 2011, North Dakota would have ranked fifth overall in the FY2012 edition of the Index, instead of 29th. The following changes would broaden the state's tax bases and thus allow for lower tax rates without reducing tax revenue. These reduced tax rates (which are unspecified and therefore not reflected in the new rankings) could improve the state's score further and provide more flexibility to choose among our other recommendations without necessarily changing the state's final Index rank. Corporate Income Tax * Provide for unlimited business net operating loss (NOL) carry-backs of up to three years. About a quarter of states allow NOL carry-backs, with the maximum generally three years. Of those that allow it, most do not limit the amount that can be carried back. Mark Robyn is an economist at the Tax Foundation.

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