North Dakota Income Tax History

Governor Burgum proposed a change to the individual income tax in North Dakota which will be considered in the next legislative session. The recent history of the tax collections is clearly relevant to the discussion of the proposed policy change.

The first graph displays the monthly collections for the individual income tax in nominal dollars. Notice there is a significant amount of volatility to this series with a few very high spikes.

I think it is worth noting that despite the incredible spikes in the collections the smoothed series only increases slightly over the time frame. Another important consideration is the contribution of the individual income tax to the total tax collections for the state. We can see this actually moves in the opposite direction.

Tax collections decline as a share of total tax revenues from over 20 percent to around 15 percent. The takeaway then is that individual income taxes were an important but smaller percentage of tax collections for the state than some other taxes (such as sales tax). This does not mean the implications of the tax change will be small. That assessment has to come later.

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