With the debt ceiling issue shelved (temporarily, I mean three months is no time at all) most eyes turn towards tax policy now. There are enough games played regarding language right now, “Tax reform” v. “Tax relief” v. “Tax cuts”, that it would seem we are in for an extended debate, or a really long argument. With leadership apparently content to draft plans outside of the committee process there seems to be little chance to quell discontent from within their own party.
I think it hardly needs mentioning again, but I guess I will: the legislative process in North Dakota probably makes it even more important that we have some confidence in our revenue forecasts. Our legislators are meeting for three months to determine budgets for the next two years. There is always the possibility of a special session if need arises, but you want that to be the truly exceptional case. Now I am not suggesting that anyone will ever get the numbers spot on, 100% accurate, but we can get closer.
I continue to think about the tax situation in North Dakota right now, particularly trying to understand what the data are trying to tell us. Obviously I want to avoid a situation of torturing the data until they confess, but that should not stop us from slicing and dicing the data to find something meaningful.
Sales tax is by far the largest consistent component in revenue generation for the state of North Dakota, but it is by no means the only one. With that in mind I am generating similar information for other revenue streams. Today it will be corporate income taxes. This one is a bit tricky to look at because there are instances of missing values. These are not missing in the sense that somebody is hiding something; these are missing values in the sense that the report provides nothing for the forecast value for corporate income tax in July, August, and September in that particular publication by the state OMB.
A recent report out by the Center on Budget and Policy Priorities (available as a pdf here) looks at the connection between state tax rates and migration between states. Or maybe it does not. They find little connection between changes in state tax rates and the migration between states.