State and Local Taxes An Overview and Comparative Guide 2012 North Dakota......Building Together for Our Tomorrow Cory Fong Tax Commissioner
Greetings from North Dakota Tax Commissioner Cory Fong Dear Friend, Welcome to the 2012 Edition of North Dakota State and Local Taxes: An Overview and Comparative Guide (a.k.a. The Red Book). Cory Fong, Tax Commissioner All across North Dakota, individuals, businesses, and government are building together for our tomorrow, which has brought about a period of extraordinary growth. A recent Gallup Poll ranked North Dakota as the best state in the nation for creating jobs. As the state with the lowest unemployment rate in the nation, North Dakota added nearly 60,000 jobs in the last decade. And, according to the 2011 Annual Sales and Use Tax Statistical Report, all major industry sectors grew in 2011. Consumer confidence is healthy and cities from west to east are reporting strong gains. Wherever you go across the state, you will notice construction projects in progress. Our population is growing, surpassing the all-time high set decades ago. Wages and personal incomes are growing faster than in any other state, placing North Dakota in the top spot as #1 in personal income and per capita personal income growth. It doesn t stop there. The Bureau of Economic Analysis ranked North Dakota #1 in Economic Growth in 2011. In CNBC s ranking of Best States for Business North Dakota jumped eight spots, landing in the Top 5 States for Business. Recently, the annual 24/7 Wall St. study ranked North Dakota the best run state in the nation. These extraordinary times have led to record revenue collections, too, which is remarkable when you consider what has been happening nationally. For example, in North Dakota during the first 14 months of the 2011-13 biennium, Sales and Use tax collections increased 89 percent compared to the previous biennium. For Individual Income Tax, that increase is 41 percent; and for Corporate Income Tax the increase is a robust 125 percent. An important note to make about the increase in income tax collections is that the growth occurred even though significant income tax rate reductions were enacted for 2011. The Red Book is designed for anyone who wants to learn more about North Dakota s taxes. It brings together the tax laws, a historical perspective of those taxes, and combines the latest data with comparisons and rankings with other states. This version contains the most recent statistical data available as of. I am always interested in hearing from you. Please feel free to share with me your suggestions and input concerning North Dakota taxes and our department. Sincerely, Cory Fong Tax Commissioner North Dakota......Building Together for Our Tomorrow
TABLE OF CONTENTS REVENUE OVERVIEW... 1 Comparison of Revenue Sources - Percent of Total State General Fund...1 Comparison of Expenditures - Percent of Total State General Fund... 1 State General Fund Budget by Revenue Sources: 2001-03 through 2011-13 Biennia... 2 Office of State Tax Commissioner Net Collections: 2002-2012... 3 Source of Major State and Local Taxes: 2002-2012... 4 STATE COMPARISONS... 5 State vs. Local Tax Collections - Regional Comparison: 2009-10... 5 Comparing the 50 States' Combined State/Local Tax Burden: 2011... 6 Taxes Per Capita and as a Percent of Income, Calendar Year 2011, by State...7 Estimated Burden of Major State & Local Taxes for a Family of Three: 2011... 8 Major Taxes as a Percent of Income... 9 Major Tax Burden for Family of Three... 9 State Taxes by Source: Fiscal Year 2011... 10 Total State Tax Collections Per Capita: Fiscal Year 2011...11 Total State Taxes, Except Severance Taxes, Per Capita: Fiscal Year 2011...11 Tax Freedom Day 2012, by State... 12 CIGARETTE AND TOBACCO TAXES... 13 Current Law... 13 Historical Overview... 13 Comparison of State Tobacco Products Taxes: 2012... 15 Cigarette Tax and Tobacco Tax Collections... 16 Comparison of State Excise Tax Rates on Cigarettes: 2012... 16 COAL TAXES... 17 Coal Severance Tax... 17 Current Law... 17 Historical Overview... 17 Taxation of Coal In Neighboring States... 19 Coal Severance Tax Collections and Distribution: 2002-2013... 20 County Breakdown - Coal Severance Tax Revenue: 2002 and 2012... 20 North Dakota Taxable Coal Production: 2002-2012... 20 Coal Conversion Tax... 21 Current Law... 21 Historical Overview... 22 Coal Conversion Tax Collections and Distribution: 2002-2013... 24 County Breakdown - Kilowatt Hours Produced Subject to Coal Conversion Tax: 2002 and 2012... 24 Kilowatt Hours (KWH) Produced Subject to Coal Conversion Tax: 2002-2012... 24 - i -
CORPORATION INCOME TAX... 25 Current Law... 25 Historical Overview... 27 State Comparisons... 32 Corporation Income Tax Collections: 2002-2013... 32 Historical North Dakota Corporation Income Tax Brackets and Rates... 33 Comparison of State Corporation Income Tax Rates: As of January 1, 2012... 34 ESTATE TAX... 36 Current Law... 36 Historical Overview... 36 Estate Tax Collections... 36 FINANCIAL INSTITUTION TAX... 37 Current Law... 37 Historical Overview... 37 Financial Institution Tax: 2002-2010... 39 Distribution of Financial Institution Tax... 39 FUEL TAXES... 40 Current Law... 40 Historical Overview... 41 Distribution of Revenue... 42 Fuel Taxes and Fees Disbursements... 43 Motor Vehicle Fuels - Gallons Taxed... 43 Special Fuels - Gallons Taxed - Per Gallon Tax Rate... 43 Tribal Fuel Taxes and Fees Disbursements... 43 Special Fuels - Gallons Taxed - 2% or $.04 or Heating Fuel... 43 State Motor Fuel Tax Rates: As of January 1, 2012... 44 GAMING TAXES... 45 Current Law... 45 Historical Overview... 46 Gaming Tax Collections - Levied on Total Adjusted Gross Proceeds... 48 Gaming Tax Collections - Levied on Total Gross Proceeds... 48 Excise Tax Collections - Levied on Gross Proceeds of Pull Tabs... 48 Pari-Mutuel Racing Collections - Levied on On- and Off-Track Horse Racing... 48 INDIVIDUAL INCOME TAXES... 49 Current Law... 49 Historical Overview... 51 Individual Income Tax Collections: 2002-2013... 54 Per Capita Comparison of Individual Income Tax Collections: Fiscal Year 2011... 55 Comparison of Individual Income Tax Features By State: 2012 Tax Year... 56 - ii -
INSURANCE PREMIUM TAX... 58 Current Law... 58 Historical Overview... 58 Insurance Premium Tax Collections and Disbursements... 59 Insurance Premium Tax Collections Per Capita: 2011... 59 LIQUOR AND BEER TAXES... 60 Current Law... 60 Historical Overview... 60 Liquor and Beer Taxes Collections... 61 Comparison of State Tax Rates - Beer: 2012... 62 Comparison of State Tax Rates - Wine: 2012... 63 Comparison of State Tax Rates - Distilled Spirits: 2012... 64 NORTH DAKOTA LOTTERY... 65 Current Law... 65 Financial Data... 66 Percent Allocation of Lottery Ticket Sales... 66 OIL AND GAS TAXES... 67 Current Law... 67 Historical Overview... 69 Oil and Gas Taxes Distribution Formula Changes... 73 Oil and Gas Gross Production Tax Revenue... 74 Oil Extraction Tax Revenue... 74 Trends in Oil and Gas Tax Collections... 75 North Dakota Oil Statistics: 2002-2011... 75 5% Gross Production Tax... 76 6½ % Oil Extraction Tax... 76 Estimated Distribution... 76 Oil Taxes in the 14 Major Oil Producing States: September 2012... 77 Western Oil and Gas Producing States Average Annual Rig Activity...82 PROPERTY TAXES... 83 Current Law... 83 Historical Overview... 87 Ad Valorem and Special Property Taxes Levied: 2008-2012... 94 North Dakota Property Tax System... 95 General and Special Property Taxes by Taxing Districts: 2002-2012... 96 Percent of Property Taxes by Taxing District: 2012... 96 General Property Taxes by County: 2008-2012... 97 Statewide Average Mill Rates: 2002-2012... 98 Statewide Property Taxable Valuations: 2002-2012... 98 Ad Valorem Property Taxes Levied: 2002-2012... 98 True and Full Value by Classification: 2002-2012... 99 - iii -
Ad Valorem Property Taxes by Classification: 2002-2012... 100 Effective Rates by Classification: 2010, 2011, and 2012... 100 Ad Valorem Property Taxes - Percent of Total by Classification: 2010, 2011, and 2012... 100 Property Taxes on a $70,000 and $100,000 Owner Occupied Home in North Dakota: 2012... 101 Property Taxes on an $100,000 Owner Occupied Home in Neighboring States: 2012... 101 Per Capita State and Local Property Taxes - 2011... 102 Per $1,000 of Personal Income State & Local Property Taxes - 2011... 102 SALES AND USE TAXES... 103 Current Law... 103 Historical Overview... 107 Other Revenue Collections: Local Option Taxes, Music and Composition Tax, and Provider Assessment...111 Sales, Use, Gross Receipts, and Motor Vehicle Excise Taxes Collections and Disbursements...112 Local Sales, Use, and Gross Receipts Taxes - 2009-2011 Biennium...114 Taxable Sales and Purchases - Percentage by Business Classification: 2001 and 2011...114 Trends in Taxable Sales and Purchases...114 North Dakota Sales and Use Tax Exemptions - Estimated Biennial Fiscal Effect...115 Biennial Filing Deductions...115 State Sales Tax Rates Comparison with the Other 45 States (and D.C.) That Levy a Sales Tax: 2012...116 Total Sales & Gross Receipts Tax Collections Per Capita: 2011...117 General Sales & Gross Receipts Tax Collections Per Capita: 2011...117 Comparison of State Sales &Gross Receipts Tax Rates: Tax Rates in Effect October 1, 2012...118 Sales & Gross Receipts Tax Comparison of Surrounding States and Provinces: 2012... 120 UNEMPLOYMENT INSURANCE... 122 Current Law... 122 Historical Overview... 124 Unemployment Insurance Benefit Payments... 125 Average North Dakota Employer Tax Rate and Unemployment Insurance Tax Revenue... 125 WORKFORCE SAFETY & INSURANCE... 126 Current Law... 126 Historical Overview... 127 North Dakota Workers Compensation Premiums... 130 Earned Premium... 131 Workforce Safety & Insurance Fund Surplus... 131 Workers' Compensation Premium Rate Per $100 of Payroll... 132 - iv -
REVENUE OVERVIEW This chapter contains historical comparisons of North Dakota revenue. General Fund information is given, as well as trends in collections. Comparison of Revenue Sources Percent of Total State General Fund Cigarette & Tobacco Tax 1.2% Insurance Premium Tax 1.6% Coal Taxes 1.0% Oil Taxes 1.8% Corporation Income Tax 6.0% 2009-11 BIENNIUM $3.933 Billion Other 34.5% Individual Income Tax 18.5% Sales, Use & Motor Vehicle 35.4% Cigarette & Tobacco Tax 1.1% Coal Taxes 0.8% Corporation Income Tax 7.6% Insurance Premium Tax 1.6% Oil Taxes 6.2% (PROJECTED) 2011-13 BIENNIUM $4.894 Billion Other 15.9% Individual Income Tax 18.0% Sales, Use & Motor Vehicle 48.8% Comparison of Expenditures Percent of Total State General Fund 2009-11 General Fund Expenditures By Program Total = $3.200 Billion Public Safety 7.4% Regulatory.6% Natural Resources 1.5% Health & Human Services 21.0% Higher Education 18% General Gov't. 11.3% Elementary, Secondary and Other Education 35.7% 2011-13 General Fund Appropriations (1) Total = $4.237 Billion Public Safety 5.3% Regulatory 1.5% Natural Resources 1.1% Health & Human Services 23.3% Higher Education 15.5% Transportation.1% General Gov't. 18.6% Elementary, Secondary and Other Education 31.1% Agriculture, Economic Development & Research 4.9% Agriculture, Economic Development & Research 3.5% (1) This is the amount appropriated by the 2011 Legislative Assembly. Actual expenditures will vary from appropriated levels. SOURCE: Office of Management and Budget. - 1 -
State General Fund Budget by Revenue Sources 2001-03 through 2011-13 Biennia (in Millions) REVENUE SOURCES Biennium Revenues 2001-03 2003-05 2005-07 2007-09 2009-11 Projected 2011-13 Biennium* INTEREST, MINERAL LEASES, TRANSFERS - Interest Income 8.509 6.935 36.507 49.506 43.685 14.167 - Mineral Leasing Fees 6.441 11.025 13.960 25.307 17.522 34.782 - Bank of ND Profits Transfer 78.700 60.000 60.000 60.000 0.000 0.000 - State Mill Profits Transfer 6.000 5.000 5.000 0.000 13.902 7.646 - Gas Tax Administration Transfer 1.363 1.396 1.400 1.274 1.288 1.485 - Budget Stabilization Fund Transfer - State Aid Distribution Fund Transfer - Other Transfers 24.370 91.412 88.310 133.277 1,164.493 600.121 SALES, USE AND MOTOR VEHICLE (1) 760.211 845.768 967.653 1,176.637 1,391.636 2,387.280 INDIVIDUAL INCOME TAX 396.153 452.547 587.659 681.704 729.256 883.137 CORPORATION INCOME TAX 88.417 102.927 232.294 239.696 234.364 372.162 OIL TAXES 62.000 71.000 71.000 71.000 71.000 300.000 COAL TAXES 46.879 47.197 49.218 49.439 39.064 39.425 CIGARETTE AND TOBACCO TAXES 39.313 39.477 44.683 45.231 46.253 54.485 INSURANCE PREMIUM TAX 48.990 56.285 52.873 64.389 63.151 78.642 WHOLESALE LIQUOR TAX 11.156 11.889 12.788 14.077 15.164 17.255 BUSINESS PRIVILEGE TAX/ FINANCIAL INSTITUTIONS TAX 6.257 4.959 9.702 10.486 6.749 7.283 GAMING TAXES 27.613 20.851 17.986 20.042 16.190 11.310 LOTTERY 7.269 12.600 11.055 10.400 12.500 DEPARTMENTAL FEES & COLLECTIONS 57.506 61.005 53.781 62.143 68.578 71.934 OTHER (2) 56.457 TOTAL GENERAL FUND REVENUES 1,669.878 1,953.399 2,317.414 2,715.263 3,932.695 4,893.613 BEGINNING BALANCE 62.241 14.790 68.015 295.541 361.894 996.833 REVENUES AND BEGINNING BALANCE 1,732.119 1,968.189 2,385.429 3,010.805 4,294.589 5,890.446 FUNDS RELATED TO PRIOR BIENNIUM CARRY-OVER AND ADJUSTMENTS 13.996 7.139 8.728 17.151 77.145 106.945 REVENUE AVAILABLE DURING BIENNIUM 1,746.115 1,975.328 2,394.157 3,027.955 4,371.734 5,997.391 GENERAL FUND EXPENDITURES 1,723.561 1,798.211 1,978.386 2,458.012 3,199.549 4,343.113 TRANSFER TO BUDGET STABILIZATION FUND 99.473 100.527 124.937 61.415 NET CARRYOVER OBLIGATIONS AND ADJUSTMENTS 9.444 9.629 19.703 83.112 113.937 UNOBLIGATED ENDING BALANCE 14.790 68.015 295.541 361.894 996.833 1,654.650 (3) * Based on the November 2012 revised forecast. (1) A portion of sales, use and motor vehicle excise taxes is deposited in the State Aid Distribution Fund (S.A.D.F.) and that revenue is not included in this table. As of January 1, 1999, the portion is 40% x 1% general sales tax rate. (2) Federal Fiscal Relief payments deposited in the State General Fund. (3) N.D.C.C. 54-27.2-02 provides that any end of biennium balance in excess of $65.0 million must be transferred to the Budget Stabilization Fund, up to a cap of 10.0% of appropriations. The current balance is $394.2 million. The actual transfer will be dependent upon the level of appropriations authorized by the 2013 Legislature. - 2 -
Office of State Tax Commissioner Net Collections Fiscal Years 2002-2012 4100 3600 3100 millions of dollars 2600 2100 1600 Coal Taxes Other Taxes & Fees Motor Fuels Gross Production 1100 Oil Extraction Corporate Income 600 Individual Income Sales & Use 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Other Taxes & Fees Motor Fuels Coal Taxes Gross Production Oil Extraction Corporate Income Individual Income Sales & Use Tax Type 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sales & Use 401.6 424.9 441.4 480.6 495.6 556.0 611.6 683.6 684.1 791.7 1139.8 Ind. Income 198.9 200.5 214.1 241.3 274.6 318.4 308.9 378.1 304.3 429.9 432.2 Corp. Income 41.6 46.0 40.3 62.7 111.8 120.0 140.7 99.0 87.9 146.5 198.7 Oil Extraction 17.1 22.6 25.6 45.6 61.8 67.2 182.4 185.8 280.6 505.6 880.4 Gross Production 36.5 43.5 47.5 74.0 104.4 118.8 209.4 221.5 302.1 481.1 795.7 Coal Taxes 38.2 39.4 40.6 37.7 39.8 40.9 39.0 41.6 37.7 34.4 36.4 Motor Fuels 111.7 115.3 119.9 122.2 134.1 140.0 144.0 144.5 151.7 171.6 205.2 Other Taxes & Fees 121.3 131.2 121.9 135.5 148.0 158.5 165.3 177.7 183.6 221.3 277.4 Total Net Collections* 966.9 1023.4 1051.3 1199.7 1370.0 1,519.8 1,801.3 1,931.8 2,032.0 2782.1 3965.8 *Totals may not sum due to rounding SOURCE: Office of State Tax Commissioner - 3 -
Source of Major State and Local Taxes 2002-2012 Millions 1,200 1,000 800 600 400 2002 2003 2004 2005 2006 2007 2008 2009 2010 200 0 State Sales & Use Individual Property Local Sales & Use* 2011 2012 } Major State Sources } Major Local Sources State Individual Local Fiscal Sales & Income Property Sales & Year Use Tax Tax Tax Use Tax* 2002 335,598,693 198,922,525 532,629,675 65,368,838 2003 360,908,220 200,528,205 560,751,909 73,666,551 2004 368,323,637 214,145,899 586,412,017 68,644,864 2005 411,553,514 241,319,731 618,065,693 78,761,154 2006 428,906,406 274,621,741 659,789,376 87,563,544 2007 485,986,114 318,433,494 706,427,621 92,143,032 2008 530,283,623 308,889,352 740,540,738 96,566,720 2009 607,170,311 378,135,463 776,398,475 108,264,455 2010 603,732,481 304,252,924 678,749,378 119,411,810 2011 791,691,834 429,899,506 721,988,244 144,237,942 2012 1,139,782,929 432,191,803 757,769,004 191,754,625 * The local sales tax figures do not include city occupancy or city restaurant and lodging taxes. SOURCE: Office of State Tax Commissioner. - 4 -
STATE COMPARISONS This chapter provides a comparison of overall tax levels between the states.* There are a variety of ways to rank and compare state taxes. We have used a number of different sources to give you a broad range of research. Each measurement provides insights, but also has limitations. Please contact the Office of State Tax Commissioner for more information about the various measurements. State vs. Local Tax Collections Regional Comparison - 2009-2010 US Avg WY SD ND NE MT MN 55 45 61 39 51 49 76 24 52 48 67 33 71 29 0 20 40 60 80 100 percent State Local SOURCE: State & Local Government Finances by Level of Government by State: 2009-10 www.census.gov/govs/statetax * The rankings of specifi c types of taxes are found throughout this publication. Those comparisons are located within the chapter relating to that particular type of tax. - 5 -
Comparing the 50 States' Combined State/Local Tax Burdens in 2011 (Measuring Taxes as a Percentage of Income) Each state's total tax burden (taxes as a percentage of income) is a combination of federal, state, and local tax burdens. It can be instructive to strip out federal taxes and compare just the state and local tax burdens. Generally, high-income states rise because, with their high costs of living and commensurately higher salaries, they are hit harder by the progressive federal income tax. Low-income states that have high state-local tax burdens fall in the ranking when federal taxes are added in. State and Local Total Change in Ranking After Tax Tax Adding Burden Rank Burden Rank Federal Taxes Alaska 16.8% 1 Alaska 31.5% 4 3 NORTH DAKOTA 11.8% 2 NORTH DAKOTA 27.1% 11 9 Vermont 10.3% 3 Vermont 23.1% 24 21 Wyoming 9.0% 4 Wyoming 22.0% 31 27 West Virginia 8.3% 5 West Virginia 18.6% 42 37 Hawaii 8.2% 6 Hawaii 18.6% 41 35 Delaware 8.0% 7 Delaware 64.1% 1-6 Minnesota 8.0% 8 Minnesota 38.5% 2-6 Arkansas 7.8% 9 Arkansas 34.4% 3-6 Maine 7.2% 10 Maine 19.3% 38 28 California 7.1% 11 California 24.2% 18 7 Mississippi 7.0% 12 Mississippi 16.7% 48 36 New Mexico 7.0% 13 New Mexico 18.3% 44 31 Kentucky 6.9% 14 Kentucky 23.3% 23 9 New York 6.8% 15 New York 27.1% 10-5 Wisconsin 6.8% 16 Wisconsin 24.0% 19 3 Michigan 6.6% 17 Michigan 22.1% 28 11 Connecticut 6.5% 18 Connecticut 28.5% 8-10 Indiana 6.4% 19 Indiana 25.3% 15-4 Montana 6.4% 20 Montana 18.1% 46 26 North Carolina 6.4% 21 North Carolina 22.8% 25 4 Idaho 6.3% 22 Idaho 18.4% 43 21 Massachusetts 6.3% 23 Massachusetts 28.2% 9-14 Nevada 6.3% 24 Nevada 19.2% 40 16 Pennsylvania 6.0% 25 Pennsylvania 25.1% 16-9 New Jersey 5.9% 26 New Jersey 30.1% 6-20 Rhode Island 5.9% 27 Rhode Island 28.6% 7-20 Kansas 5.8% 28 Kansas 22.7% 26-2 Ohio 5.8% 29 Ohio 31.4% 5-24 Utah 5.8% 30 Utah 21.4% 33 3 Washington 5.8% 31 Washington 23.3% 22-9 Iowa 5.7% 32 Iowa 19.9% 36 4 Oregon 5.6% 33 Oregon 21.0% 34 1 Maryland 5.4% 34 Maryland 22.0% 30-4 Oklahoma 5.4% 35 Oklahoma 22.5% 27-8 Nebraska 5.3% 36 Nebraska 25.3% 14-22 Alabama 5.2% 37 Alabama 17.3% 47 10 Illinois 5.2% 38 Illinois 26.4% 12-26 Louisiana 5.0% 39 Louisiana 25.4% 13-26 South Carolina 4.9% 40 South Carolina 16.1% 50 10 Arizona 4.8% 41 Arizona 19.3% 39-2 Virginia 4.7% 42 Virginia 20.8% 35-7 Tennessee 4.6% 43 Tennessee 23.9% 20-23 Georgia 4.5% 44 Georgia 21.7% 32-12 Missouri 4.4% 45 Missouri 24.9% 17-28 Florida 4.3% 46 Florida 19.8% 37-9 Colorado 4.2% 47 Colorado 22.1% 29-18 Texas 4.2% 48 Texas 23.4% 21-27 New Hampshire 3.8% 49 New Hampshire 18.2% 45-4 South Dakota 3.8% 50 South Dakota 16.5% 49-1 U.S. Average 5.8% U.S. Average 24.4% SOURCE: State Government Tax Collections: 2011, www.census.gov/govs/statetax, US Dept. of Commerce, Bureau of Economic Analysis, Regional Economic Accounts, www.bea.gov/regional - 6 -
Taxes Per Capita and as a Percent of Income, Calendar Year 2011, by State Per Per Per Total Federal State/Local Total Taxes State & Local Capita Capita Capita Per Taxes as Taxes as Taxes as as % of Taxes as % Total Federal State/Local Capita % of % of % of Income of Income Taxes Taxes Taxes Income Income Income Income Rank Rank United States $10,181 $7,750 $2,430 $41,560 24.5 18.6 5.8 - - Alabama 6,044 4,246 1,798 34,880 17.3 12.2 5.2 47 38 Alaska 14,382 6,723 7,659 45,665 31.5 14.7 16.8 4 1 Arizona 6,752 5,079 1,674 35,062 19.3 14.5 4.8 39 41 Arkansas 11,594 8,961 2,634 33,740 34.4 26.6 7.8 3 9 California 10,557 7,461 3,096 43,647 24.2 17.1 7.1 18 11 Colorado 9,732 7,881 1,850 44,053 22.1 17.9 4.2 29 47 Connecticut 16,474 12,723 3,751 57,902 28.5 22.0 6.5 8 18 Delaware 26,578 23,251 3,327 41,449 64.1 56.1 8.0 1 7 Florida 7,835 6,127 1,708 39,636 19.8 15.5 4.3 37 46 Georgia 7,805 6,174 1,630 35,979 21.7 17.2 4.5 32 44 Hawaii 7,989 4,457 3,533 42,925 18.6 10.4 8.2 41 6 Idaho 6,062 4,004 2,058 32,881 18.4 12.2 6.3 43 24 Illinois 11,543 9,256 2,287 43,721 26.4 21.2 5.2 12 37 Indiana 9,002 6,734 2,288 35,689 25.3 18.9 6.4 15 20 Iowa 8,178 5,815 2,363 41,156 19.9 14.1 5.7 36 32 Kansas 9,260 6,882 2,378 40,883 22.7 16.8 5.8 26 28 Kentucky 7,932 5,597 2,335 33,989 23.3 16.5 6.9 23 14 Louisiana 9,782 7,844 1,938 38,549 25.4 20.3 5.0 13 39 Maine 7,401 4,633 2,768 38,299 19.3 12.1 7.2 38 10 Maryland 11,168 8,422 2,746 50,656 22.0 16.6 5.4 30 35 Massachusetts 15,076 11,723 3,354 53,471 28.2 21.9 6.3 9 23 Michigan 8,016 5,632 2,384 36,264 22.1 15.5 6.6 28 17 Minnesota 17,143 13,597 3,546 44,560 38.5 30.5 8.0 2 8 Mississippi 5,338 3,084 2,255 32,000 16.7 9.6 7.0 48 12 Missouri 9,467 7,785 1,682 37,969 24.9 20.5 4.4 17 45 Montana 6,514 4,205 2,308 36,016 18.1 11.7 6.4 46 21 Nebraska 10,753 8,499 2,253 42,450 25.3 20.0 5.3 14 36 Nevada 7,112 4,786 2,325 36,964 19.2 12.9 6.3 40 22 New Hampshire 8,363 6,603 1,760 45,881 18.2 14.4 3.8 45 49 New Jersey 15,790 12,709 3,082 52,430 30.1 24.2 5.9 6 27 New Mexico 6,253 3,861 2,392 34,133 18.3 11.3 7.0 44 13 New York 13,876 10,385 3,491 51,126 27.1 20.3 6.8 10 15 North Carolina 8,204 5,883 2,320 36,028 22.8 16.3 6.4 25 19 NORTH DAKOTA 12,777 7,189 5,588 47,236 27.1 15.2 11.8 11 2 Ohio 11,888 9,707 2,181 37,836 31.4 25.7 5.8 5 31 Oklahoma 8,485 6,436 2,049 37,679 22.5 17.1 5.4 27 34 Oregon 7,871 5,776 2,095 37,527 21.0 15.4 5.6 34 33 Pennsylvania 10,632 8,093 2,539 42,291 25.1 19.1 6.0 16 25 Rhode Island 12,527 9,922 2,605 43,875 28.6 22.6 5.9 8 26 South Carolina 5,376 3,733 1,643 33,388 16.1 11.2 4.9 50 40 South Dakota 7,287 5,613 1,674 44,217 16.5 12.7 3.8 49 50 Tennessee 8,753 7,058 1,696 36,567 23.9 19.3 4.6 20 43 Texas 9,405 7,723 1,682 40,147 23.4 19.2 4.2 21 48 Utah 7,163 5,219 1,944 33,509 21.4 15.6 5.8 33 30 Vermont 9,619 5,325 4,294 41,572 23.1 12.8 10.3 24 3 Virginia 9,571 7,420 2,150 46,107 20.8 16.1 4.7 35 42 Washington 10,240 7,691 2,549 43,878 23.3 17.5 5.8 22 29 West Virginia 6,215 3,443 2,772 33,403 18.6 10.3 8.3 42 5 Wisconsin 9,491 6,804 2,687 39,575 24.0 17.2 6.8 19 16 Wyoming 10,525 6,191 4,334 47,898 22.0 12.9 9.0 31 4 SOURCE: State Government Tax Collections: 2011, www.census.gov/govs/statetax, US Dept. of Commerce, Bureau of Economic Analysis, Regional Economic Accounts, www.bea.gov/regional - 7 -
- 8 - Estimated Burden of Major State & Local Taxes for a Family of Three - 2011* $25,000 Gross Family Income Tax Type Fargo, ND Billings, MT Minneapolis, Sioux Falls, Cheyenne, Omaha, NE MN SD WY Income $35 $160 $0 $0 $0 $0 Property 1 $1,394 $1,745 $1,778 $1,524 $1,488 $1,618 Sales $588 $0 $547 $851 $672 $707 Auto $211 $318 $353 $190 $264 $285 Total $2,228 $2,223 $2,679 $2,565 $2,424 $2,609 % of Income 8.9% 8.9% 10.7% 10.3% 9.7% 10.4% National rank* 50 51 40 45 47 44 $50,000 Gross Family Income Tax Type Fargo, ND Billings, MT Minneapolis, Sioux Falls, Cheyenne, Omaha, NE MN SD WY Income $361 $600 $1,073 $0 $0 $806 Property $2,114 $2,220 $2,986 $2,592 $961 $2,579 Sales $810 $0 $775 $1,128 $892 $930 Auto $257 $361 $419 $215 $313 $379 Total $3,542 $3,181 $5,254 $3,935 $2,166 $4,693 % of Income 7.1% 6.4% 10.5% 7.9% 4.3% 9.4% National rank* 44 49 16 37 51 26 $100,000 Gross Family Income Tax Type Fargo, ND Billings, MT Minneapolis, Sioux Falls, Cheyenne, Omaha, NE MN SD WY Income $1,219 $3,471 $3,922 $0 $0 $3,584 Property $2,667 $2,756 $3,631 $3,391 $1,214 $3,416 Sales $1,184 $0 $1,164 $1,643 $1,319 $1,361 Auto $512 $844 $809 $424 $587 $637 Total $5,579 $7,071 $9,526 $5,458 $3,120 $8,997 % of Income 5.6% 7.1% 9.5% 5.5% 3.1% 9.0% National rank* 43 39 18 45 51 25 1 Based on 20 percent of estimated annual rent * Based on all 50 states and the District of Columbia. SOURCE: Tax Rates and Tax Burdens In the District of Columbia - A Nationwide Comparison 2011, Government of the District of Columbia.
Major Taxes as a Percent of Income Family of 3 - $50,000 per year percent of income going to taxes 12 10 8 6 4 2 0 0.5 1.6 4.2 0.7 0.7 4.4 1.2 0.8 1.6 6.0 2.1 0.4 2.3 5.2 Fargo Billings Minneapolis Sioux Falls Cheyenne Omaha US Average (1) 7.1% 6.4% 10.5% 7.9% 4.3% 9.4% 9.9%* Income Property Sales Auto SOURCE: Tax Rates and Tax Burdens in the District of Columbia - A Nationwide Comparison 2011, Government of the District of Columbia 0.6 1.8 1.9 0.8 1.9 5.2 1.6 0.6 2.0 5.4 2.5 Major Tax Burden for Family of Three Earning $50,000 per year Thousands 5 4 3 2 1 0 419 323 775 379 981 215 930 257 361 1,128 810 2,986 2,579 2,220 313 2,686 2,114 2,592 892 1,227 1,073 361 600 961 806 Fargo Billings Minneapolis Sioux Falls Cheyenne Omaha US Average (1) $3,542 $3,181 $5,254 $3,935 $2,166 $4,693 $4,971* Income Property Sales Auto * Amounts may not add due to rounding. (1) Based on cities actually levying tax SOURCE: Tax Rates and Tax Burdens in the District of Columbia - A Nationwide Comparison 2011, Government of the District of Columbia - 9 - North Dakota Office of State Tax Commissioner
State Taxes by Source - Fiscal Year 2011 General Individual Corporate Motor All Sales & Use Income Income Fuels Licenses Other Alabama 25.1 % 32.3 % 3.4 % 6.3 % 5.7 % 26.8 % Alaska -- -- 13.0 0.7 2.4 83.7 Arizona 41.1 26.4 5.1 7.0 3.8 16.3 Arkansas 35.3 29.3 4.8 6.0 4.6 19.6 California 26.5 43.2 8.2 4.8 7.0 10.0 Colorado 22.9 47.9 4.0 6.5 6.3 12.1 Connecticut 24.2 48.1 5.0 3.5 3.3 15.7 Delaware -- 31.8 10.6 3.7 38.8 14.8 Florida 59.4 -- 5.7 6.9 6.5 21.3 Georgia 31.7 47.8 4.1 5.8 2.9 7.4 Hawaii 51.3 25.6 1.4 1.9 3.1 16.4 Idaho 36.3 35.8 5.2 7.3 9.1 6.0 Illinois 25.2 38.1 6.2 4.4 8.5 17.3 Indiana 42.0 30.7 4.8 5.2 4.2 12.9 Iowa 30.8 39.4 3.4 6.1 10.1 9.9 Kansas 36.4 39.8 3.6 6.4 4.8 8.8 Kentucky 28.3 33.5 5.0 7.1 4.6 21.2 Louisiana 31.7 27.1 2.2 6.8 3.9 28.1 Maine 27.4 38.6 5.6 6.5 6.7 14.8 Maryland 24.3 41.5 4.8 4.7 4.6 19.9 Massachusetts 22.2 52.5 8.7 2.9 3.8 9.6 Michigan 40.2 27.1 3.0 4.1 5.9 19.4 Minnesota 24.5 39.4 5.3 4.4 5.8 20.3 Mississippi 43.6 21.5 5.2 6.3 6.7 16.3 Missouri 29.4 44.8 3.2 7.1 5.6 9.7 Montana -- 35.2 5.3 9.0 13.3 36.8 Nebraska 33.3 41.4 3.7 7.6 5.4 8.3 Nevada 46.3 -- -- 4.6 9.6 39.4 New Hampshire -- 3.6 25.1 7.0 11.6 52.5 New Jersey 29.9 39.0 8.1 1.9 5.5 15.3 New Mexico 37.7 21.4 4.6 4.8 4.8 26.6 New York 17.0 53.2 5.9 2.3 2.7 18.6 North Carolina 27.6 44.0 4.8 7.4 6.4 9.5 NORTH DAKOTA 20.3 11.3 4.2 4.4 4.5 55.0 Ohio 30.8 35.0 0.9 6.9 13.6 12.5 Oklahoma 28.0 30.7 4.5 5.7 12.1 18.7 Oregon -- 67.7 5.7 5.4 11.5 9.4 Pennsylvania 27.6 30.3 6.1 6.3 7.9 21.4 Rhode Island 30.1 37.1 5.4 4.6 3.5 19.2 South Carolina 36.3 37.8 2.8 6.8 6.0 10.1 South Dakota 58.5 -- 1.1 9.2 14.5 16.5 Tennessee 56.9 1.7 9.8 7.7 10.1 13.5 Texas 50.4 -- -- 7.2 15.5 26.8 Utah 33.6 41.9 4.5 6.7 5.2 7.8 Vermont 12.1 20.6 3.9 3.9 3.7 55.6 Virginia 19.8 54.7 4.5 5.1 4.4 11.1 Washington 60.7 -- -- 6.9 5.3 26.9 West Virginia 23.5 32.3 5.9 7.7 2.9 27.4 Wisconsin 26.7 41.8 5.5 6.4 6.9 12.4 Wyoming 35.0 -- -- 2.8 5.7 56.3 U.S. Total 30.9 % 34.0 % 5.3 % 5.2 % 6.8 % 17.5% SOURCE: State Government Tax Collections: 2011, www.census.gov/govs/statetax, US Dept. of Commerce, Bureau of Economic Analysis, Regional Economic Accounts, www.bea.gov/regional - 10 -
Total State Tax Collections Per Capita - Fiscal Year 2011 Per Capita Total Rank State State Tax Collections 1 Alaska $7,659 2 NORTH DAKOTA $5,588 3 Wyoming $4,334 4 Vermont $4,294 5 Connecticut $3,751 6 Minnesota $3,546 7 Hawaii $3,533 8 New York $3,491 9 Massachusetts $3,354 10 Delaware $3,327 11 California $3,096 12 New Jersey $3,082 13 West Virginia $2,772 14 Maine $2,768 15 Maryland $2,746 16 Wisconsin $2,687 17 Arkansas $2,634 18 Rhode Island $2,605 19 Washington $2,549 20 Pennsylvania $2,539 21 New Mexico $2,392 22 Michigan $2,384 23 Kansas $2,378 24 Iowa $2,363 25 Kentucky $2,335 26 Nevada $2,325 27 North Carolina $2,320 28 Montana $2,308 29 Indiana $2,288 30 Illinois $2,287 31 Mississippi $2,255 32 Nebraska $2,253 33 Ohio $2,181 34 Virginia $2,150 35 Oregon $2,095 36 Idaho $2,058 37 Oklahoma $2,049 38 Utah $1,944 39 Louisiana $1,938 40 Colorado $1,850 41 Alabama $1,798 42 New Hampshire $1,760 43 Florida $1,708 44 Tennessee $1,696 45 Texas $1,682 46 Missouri $1,682 47 South Dakota $1,674 48 Arizona $1,674 49 South Carolina $1,643 50 Georgia $1,630 US Average $2,430 Total State Taxes Except Severance Taxes Per Capita - Fiscal Year 2011 Total Tax Less Rank State Severance Tax 1 Vermont $4,294 2 Connecticut $3,751 3 Minnesota $3,541 4 Hawaii $3,533 5 New York $3,491 6 Massachusetts $3,354 7 Delaware $3,327 8 California $3,095 9 New Jersey $3,082 10 NORTH DAKOTA $2,834 11 Maine $2,768 12 Maryland $2,746 13 Wisconsin $2,686 14 Arkansas $2,606 15 Rhode Island $2,605 16 Washington $2,545 17 Pennsylvania $2,539 18 Wyoming $2,496 19 West Virginia $2,456 20 Michigan $2,375 21 Iowa $2,363 22 Kansas $2,336 23 North Carolina $2,320 24 Indiana $2,287 25 Illinois $2,287 26 Kentucky $2,257 27 Nebraska $2,251 28 Nevada $2,225 29 Mississippi $2,217 30 Ohio $2,180 31 Virginia $2,150 32 Oregon $2,092 33 Idaho $2,053 34 Montana $2,029 35 New Mexico $2,006 36 Utah $1,908 37 Oklahoma $1,830 38 Colorado $1,822 39 Alaska $1,797 40 Louisiana $1,778 41 Alabama $1,774 42 New Hampshire $1,760 43 Florida $1,705 44 Tennessee $1,696 45 Missouri $1,682 46 Arizona $1,667 47 South Dakota $1,661 48 South Carolina $1,643 49 Georgia $1,630 50 Texas $1,578 US Average $2,383 SOURCE: US Department of Commerce, Census Bureau. SOURCE: US Department of Commerce, Census Bureau. - 11 -
Tax Freedom Day 2012, by State Rank State Tax Freedom Day 1 Connecticut May 5 2 New Jersey May 1 3 New York May 1 4 Washington April 24 5 Illinois April 23 6 Maryland April 23 7 Wyoming April 23 8 Massachusetts April 22 9 Minnesota April 22 10 Wisconsin April 21 11 California April 20 12 Virginia April 20 13 Vermnt April 19 14 Nevad April 18 15 NORTH DAKOTA April 18 16 Pennsylvania April 18 17 Delaware April 17 18 Idaho April 17 19 Utah April 17 20 New Hampshire April 16 21 Colorado April 15 22 Kansas April 15 23 Montana April 15 24 Oregon April 15 25 Rhode Island April 16 26 Indiana April 14 27 Michigan April 14 28 Florida Apri,l 12 29 New Mexico April 12 30 Ohio April 12 31 Arkansas April 11 32 Nebraska April 11 33 North Carolina April 11 34 Texas April 11 35 Arizona April 10 36 Georgia April 10 37 Iowa April 9 38 Kentucky April 9 39 Maine April 8 40 Oklahoma April 8 41 West Virginia April 8 42 Missouri April 7 43 Alabama April 6 44 Hawaii April 6 45 Alaska April 5 46 South Dakota April 4 47 South Carolina April 3 48 Louisiana April 1 49 Mississippi April 1 50 Tennessee March 31 - District of Columbia April 20-12 - Source: Tax Foundation, www.taxfoundation.org
CIGARETTE AND TOBACCO TAXES Cigarette Tax Imposition and Rates CURRENT LAW The cigarette tax is levied at two different tax rates. Cigarettes weighing less than three pounds per thousand are taxed at 22 mills per cigarette or 44 for a common package of 20, and 55 for a package of 25. Ciga rettes weighing more than three pounds per thousand are taxed at 22½ mills per cigarette. Gray market or repatriated cigarettes may not be sold or possessed in North Dakota. "Gray market" or "repatriated" cigarettes are those cigarettes manufactured and packaged in the U.S. for the specific purpose of being exported with intent to be sold outside the U.S., and are brought back illegally into the country and sold. All cigarettes sold must be in packages of 20 or more cigarettes. Roll-your-own cigarette tobacco is taxed at the cigarette rate. One cigarette equals.09 ounces of roll-your-own tobacco. Sales of bulk roll-your-own cigarette tobacco are converted to taxable cigarettes. Only tobacco advertised as roll-your-own is taxed at the cigarette rate. Both wholesalers and dealers must be licensed by the Attorney General. Wholesalers pay the tax with monthly reports filed with the Tax Commis sioner. For administrative compensation, wholesalers who file and pay on time may deduct 1½% of the tax due, up to a maximum of $100 per month. Distribution of Revenue Three cents of the 44 per package are distributed to the cities based on population and the remainder goes to the State General Fund. Of the 55 on the larger packages, 3¾ goes to the cities with the remainder to the State General Fund. Tobacco Products Tax Imposition and Rates Pipe tobacco and cigars are taxed at 28% of the wholesale purchase price. Snuff is taxed at 60 cents per ounce and chewing tobacco taxed at 16 cents per ounce. The tobacco products tax is administered in a manner similar to the cigarette tax. Distribution of Revenue Revenue from the tobacco products tax is placed in the State General Fund. Tribal Cigarette And Tobacco Tax The Standing Rock Sioux Tribe levies a cigarette and tobacco tax on all Native American retailers operating on the Standing Rock Sioux Reservation. The tax rates are identical to the state tax rates. The Tax Commissioner acts as the agent of the tribe to collect the tax. Seventyfive percent of collections, less a 3% administrative fee, is returned to the tribe. Twenty-five percent plus the administrative fee is deposited in the State General Fund. HISTORICAL OVERVIEW Significant Changes in Law 1983 Session The cigarette tax was increased from 6 mills to 9 mills per cigarette. This increased the cigarette tax from 12 to 18 per package of 20. 1987 Session The cigarette tax was increased from 9 to 13½ mills per cigarette, or from 18 to 27 per package of 20. The tobacco products tax was increased from 11% to 20% of the wholesale purchase price. 1989 Session The cigarette tax was increased from 13½ to 15 mills per cigarette, or from 27 to 30 per package of 20. The tobacco products tax was increased from 20% to 25% of the wholesale purchase price. All tobacco products other than cigarettes and specific rollyour-own tobacco, such as pipe tobacco, chewing tobacco, snuff and cigars are subject to a tobacco products tax. - 13 -
1991 Session The cigarette tax was decreased from 15 mills to 14½ mills per cigarette, or from 30 to 29 per pack of 20. The tobacco products tax was decreased from 25% to 22% of the wholesale purchase price. Cigarette stamp requirements were repealed and replaced with monthly reports and payments. 1993 Session The cigarette tax was increased from 14½ to 22 mills per cigarette, or from 29 to 44 per package of 20. The tobacco products tax was increased from 22% to 28% of the wholesale purchase price. 1993 Agreement The Tax Commissioner and the Standing Rock Sioux Tribe signed an agreement to allow the commissioner to act as an agent of the tribe for the collection of a tribal cigarette and tobacco tax. 1999 Session The sale of gray market cigarettes was prohibited, taxation of roll-your-own tobacco was moved from Other Tobacco Products to taxation as a cigarette and a minimum package size was established at 20 cigarettes per package. N.D.C.C. 51-25 was enacted and requires the Tax Commissioner to accumulate information on purchases of cigarettes from non-participating manufacturers in the cigarette Master Settlement Agreement. 2001 Session The method of taxing snuff and chewing tobacco was changed from a percentage of the wholesale price to a weight based value. Snuff is taxed at 60 cents per ounce and chewing tobacco is taxed at 16 cents per ounce. A change in the definition of Other Tobacco Products removed cigarette papers from the tobacco products tax. Cigars and pipe tobacco remain taxable at 28% of the whole purchase price. 2003 Session The sale of "beedie" cigarettes was banned. Beedies are a product containing tobacco wrapped in a temburni leaf. Legislation prohibiting any dealer or distributor from knowingly selling or distributing any product not in compliance with N.D.C.C. 51-25-02 was enacted. 2005 Session New legislation requires vendors selling cigarettes over the Internet to register with the Tax Commissioner and provide sales and customer information. Internet vendors are also required to verify the age of cigarette customers. 2009 Session Fire safe cigarette legislation, N.D.C.C. 18-13, to be enforced by the State Fire Marshall, was passed and requires all cigarette brands to meet fire safe certification to be legally sold in North Dakota. The effective date of the legislation was August 1, 2010. - 14 -
Comparison of State Tobacco Products Taxes January 1, 2012 State Tax Rate/Base (1) State Tax Rate/Base (1) Alabama (2) Cigars Tobacco/Snuff Alaska Arizona Cigars Tobacco/Snuff Arkansas California (3) Colorado Connecticut (4) Delaware Florida (5) Tobacco/Snuff Georgia Little Cigars Other Cigars Tobacco Hawaii (6) Large Cigars Tobacco/Snuff Idaho Illinois Indiana Iowa (6) Kansas Kentucky Louisiana Cigars Snuff/Smoking Tob. Maine Chewing Tob./Snuff Smoking Tob./Cigars Maryland Massachusettes Smokeless Tob. Smoking Tob./Cigars 3.0-40.5 /10 cigars 1-8 /ounce 75% Wholesale Price 33.7 -$1.10/10 cigars 23.8 /ounce 68% Manufacturer's Price 31.73% Wholesale Price 40% Manufacturer's Price 50% Wholesale Price 15% Wholesale Price 85% Wholesale Price 2.5 /10 cigars 23% Wholesale Price 10% Wholesale Price 50% Wholesale Price 70% Wholesale Price 40% Wholesale Price 18% Wholesale Price 24% Wholesale Price 50% Wholesale Price 10% Wholesale Price 15% Wholesale Price 8%-20% Manufacturer's Price 20-33% Manufacturer's Price $2.02/ounce 20% Wholesale Price 15% Wholesale Price 90% Wholesale Price 30% Wholesale Price Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina NORTH DAKOTA Cigars & Tobacco Chewing Tob./Snuff Ohio Oklahoma Cigars Little & Large Snuff/Tobacco Oregon Rhode Island South Carolina South Dakota Tennessee Texas (7) Cigars Tobacco/Snuff Utah Virginia Vermont Washington West Virginia Wisconsin Wyoming (8) Dist. of Columbia 32% Wholesale Price 70% Wholesale Price 15% Manufacturer's Price 10% Manufacturer's Price 50% Wholesale Price 20% Wholesale Price 30% Wholesale Price 48% Wholesale Price 30% Wholesale Price 25% Product Value 75% Wholesale Price 12.8% Wholesale Price 28% Wholesale Price 16-60 /ounce 17% Wholesale Price 36-1.20 /10 cigars 60%-80% factory list price 65% Wholesale Price 80% Wholesale Price 5% Manufacturer's Price 35% Wholesale Price 6.6% Wholesale Price 1-15 /10 cigars $1.16/ounce 86% Manufacturer's Price 10% Wholesale Price 92% Manufacturer's Price 95% Wholesale Price 7% Wholesale Price 71% Manufacturer's Price 20% Wholesale Price 75 /ounce SOURCE: Compiled by Federation of Tax Administrators from various sources. (1) The volume based tax rates were converted to cents per 10 cigars or per ounce for consistency. (2) Alabama's cigar tax rate rises with the retail price; the rate on smoking tobacco and snuff depends on package weight. (3) California adjusts the tax rate annually, effective July 1st each year. (4) Connecticut taxes snuff tobacco at $1.00 per ounce. (5) Florida's rate includes a 60% surtax. (6) Little cigars are taxed as cigarettes. (7) The Texas rate on tobacco is scheduled to increase on September 1, 2012. (8) Or 10% of retail price in Wyoming. - 15 -
Cigarette Tax and Tobacco Tax Collections Cigarette and Total Tobacco Tax Cigarette Tax Cigarette Tax Tobacco Tax Fiscal Year Collections (General Fund) (General Fund) (Cities) (Tribal) 2000 22,825,622 1,983,222 19,359,086 1,414,712 68,602 2001 21,777,568 2,040,283 18,299,504 1,339,190 98,591 2002 21,541,087 2,233,271 17,913,354 1,313,836 80,626 2003 20,432,947 2,276,308 16,873,241 1,220,881 62,517 2004 21,134,603 2,297,901 17,477,510 1,284,013 75,179 2005 21,036,995 2,452,912 17,248,389 1,260,003 75,691 2006 23,457,650 2,707,489 19,278,592 1,407,166 64,403 2007 24,210,059 2,864,731 19,832,558 1,449,424 63,346 2008 24,098,407 3,165,007 19,448,680 1,421,337 63,383 2009 24,087,542 3,388,878 19,228,206 1,405,152 65,306 2010 23,848,888 3,976,398 18,454,355 1,353,442 64,693 2011 25,372,066 4,746,866 19,161,819 1,400,357 63,024 2012 28,306,348 5,670,933 21,023,989 1,536,055 75,371 2013 est. 29,517,000 6,522,000 21,356,000 1,563,000 76,000 SOURCE: North Dakota Office of State Tax Commissioner State Excise Tax Rates on Cigarettes January 1, 2012 Cents State Per Pack New York (a) 435 Rhode Island 346 Connecticut 340 Hawaii 320 Washington 302.5 New Jersey 270 Vermont 262 Wisconsin 252 Massachusetts 251 Dist. of Columbia (e) 250 Alaska 200 Arizona 200 Maine 200 Maryland 200 Michigan 200 Montana 170 Utah 170 State Cents Per Pack New Hampshire 168 New Mexico 166 Delaware 160 Pennsylvania 160 South Dakota 153 Texas 141 Iowa 136 Florida (b) 133.9 Ohio 125 Minnesota (d) 123 Oregon 118 Arkansas 115 Oklahoma 103 Indiana 99.5 Illinois (a) 98 California 87 Colorado 84 SOURCE: Compiled by Federation of Tax Administrators from various sources. State Cents Per Pack Nevada 80 Kansas 79 Mississippi 68 Nebraska 64 Tennessee (a) (c) 62 Kentucky (c) 60 Wyoming 60 Idaho 57 South Carolina 57 West Virginia 55 North Carolina 45 NORTH DAKOTA 44 Alabama (a) 42.5 Georgia 37 Louisiana 36 Virginia (a) 30 Missouri (a) 17 U.S. (median) 125.0 (a) Counties and cities may impose an additional tax on a pack of cigarettes in Alaska, 1 to 6 ; Illinois, 10 to 15 ; Missouri, 4 to 7 ; New York City, 1.50 ; Tennesse, 1 ; and Virginia, 2 to 15. (b) Florida's rate includes a surcharge of $1 per pack. (c) Dealers pay an additional enforcement and administrative fee of 0.1 per pack in Kentucky and 0.05 in Tennessee. (d) In addition, Minnesota imposes an in lieu cigarette sales tax determined annually by the Department. The current rate is 37 through July 31, 2012. (e) In addition, District of Columbia imposes an in lieu cigarette sales tax calculated every March 31. The current rate is 36. - 16 -
COAL TAXES Coal Severance Tax CURRENT LAW Imposition, Rate and Administration The coal severance tax is imposed on the act of removing coal from the earth. The tax is in lieu of both the sales and use taxes on coal and the property tax on minerals in the earth. The coal severance tax applies to all coal severed for sale or industrial purposes, except: coal used for heating build ings in the state, coal used by the state or any political subdivision of the state, and coal used in agricultural commodity processing facilities or to produce steam used in agricultural processing facilities in North Dakota or adjacent states. No severance tax may be imposed on coal purchased for improvement by coal beneficiation, which is subsequently used in, or used to produce steam that is used in agricultural commodity processing facilities in North Dakota or adjacent states or any facility owned by the state or a political subdivision of the state. The tax is applied at a flat rate of 37.5 cents per ton. An additional 2-cent per ton tax is levied for the Lignite Research Fund. A 50% reduction in the 37.5-cent tax is allowed for coal burned in a cogeneration facility designed to use renewable resources to generate 10% or more of its energy output. Counties may grant a partial or complete exemption from the counties 70% portion of the 37.5-cent tax for coal that is shipped out of state. Payments of the tax are made monthly by the owner or operator of the mine. Distribution of Revenue Revenue from the 37.5-cent per ton severance tax is deposited in the Coal Development Fund and is distributed as follows: 30% to a permanent, Constitutional Trust Fund administered by the Board of University and School Lands. The Trust Fund is used to supply loans to school districts for school construction and loans to cities, counties and school districts impacted by coal development. Invest ment income from the Trust Fund is first used to replace uncollectible loans made from the fund, and the balance is deposited in the State General Fund. Seventy percent of the tax collected and deposited in the permanent Trust Fund must be deposited in the Lignite Research Fund. 70% among the coal producing counties ac cording to the amount of coal each county produces. Revenue allotted to each county is further apportioned as follows: 40% to the county general fund; 30% to the cities within the county; and 30% to the school districts. Also, a nonproducing county within 15 miles of a currently active coal mine, and a city or school district in that county and within 15 miles of the mine, are entitled to a share of the coal producing county s severance tax revenue from that particular mine. The amount of coal production on which a county has to share its severance tax revenue with another county during a calendar year is limited to 3,400,000 tons. Revenue from the additional 2-cent per ton tax is deposited into the Lignite Research Fund. HISTORICAL OVERVIEW Significant Changes in Law 1975 Session The Legislature first enacted the coal severance tax. Set the base rate at 50 cents per ton, increasing 1 cent per ton for each three-point increase in the Wholesale Price Index. Revenue distribution formula for the 1975-1977 biennium: 30% to State General Fund; 30% to a special trust fund administered by the State Land Board; 35% to a special fund for grants to impacted political subdivisions; 5% to coal-producing counties. - 17 -
1977 Session Amended the rate to 65 cents per ton, increasing 1 cent per ton for every one-point increase in the Wholesale Price Index (Producer Price Index). Resulted in an increase from 56 cents per ton to 65 cents per ton, effective July 1, 1977. Changed the revenue distribution to: 30% to State General Fund; 15% to the Trust Fund; 35% for grants to impacted political subdivisions; and 20% to coalproducing counties. 1979 Session The base rate became 85 cents per ton, increasing 1 cent for every four-point increase in the Wholesale Price Index (Producer Price Index). Resulted in a decrease from 97 cents per ton to 85 cents per ton. Provided that if the tipple of an active coal mining operation in a county is within 15 miles of another county in which no coal is mined, the coal-producing county must share its coal severance tax revenue with the non-coal-producing county. 1981 Session Created an exemption for coal used by the state or any of its political subdivisions. Created an exemption for coal used for heating buildings within the state. Coal used for heating purposes became subject to sales tax. 1983 Session Changed filing requirements for coal mine owners or operators from quarterly to monthly. 1985 Session Created an exemption for coal used in agricultural processing or sugar beet refining plants within North Dakota or adjacent states. Enacted a 50% reduction in tax rate for coal burned in a cogeneration facility designed to use renewable resources to generate 10% or more of its energy output. 1987 Session Reduced the base rate to 75 cents per ton and eliminated the escalator clause. Prior to the change, the escalator had resulted in a rate of $1.04 per ton. Enacted an additional tax of 2 cents per ton for the period July 1, 1987, through June 30, 1989, with the revenue dedicated to lignite research. Changed the distribution of the 75-cent tax to: State General Fund 50%; counties 35%; Trust Fund 15%; and eliminated the share previously allocated for grants to impacted political subdivisions. - 18-1989 Session Made the 2-cent per ton tax for lignite research permanent. 1990 Constitutional Amendment Voters in the Primary Election approved a constitutional amendment placed on the ballot by the legislature to allow up to 50% of the taxes collected and deposited in the Trust Fund during a biennium to be appropriated by the legislature for lignite research, development, and marketing. 1991 Session Provided for 50% of taxes collected and deposited in the Trust Fund to be appropriated by the legislature for lignite research, development, and marketing, in accordance with the 1990 constitutional amendment. 1993 Session Limited the amount of coal production on which a coalproducing county has to share its severance tax with a nearby non-producing county. Added loans for school construction to uses of the Trust Fund. Exempted coal shipped out of state after June 30, 1995, and before July 1, 2000, from the state s 50% portion of the tax. Provided that counties may grant a partial or complete exemption from the county s 35% portion of the tax. 1994 Constitutional Amendment Voters in the Primary Election approved a constitutional amendment placed on the ballot by the legislature to allow appropriations from the Trust Fund for clean coal demonstration projects approved by the North Dakota Industrial Commission and the United States Department of Energy. [The Department of Energy did not approve a clean coal demonstration project in North Dakota.] 1995 Session Increased to 70% the portion of taxes collected and deposited in the Trust Fund during a biennium to be appropriated by the legislature for lignite research, development, and marketing. 1997 Session Effective July 1, 1999, the legislature exempted coal burned in coal-fired boilers in generation stations having a total capacity of not more than 210 megawatts, within North Dakota or adjacent states, from 50% of the 75-cent coal severance tax.