FOR IMMEDIATE RELEASE	Contact: Cory Fong, Tax Commissioner, 701-328-2770
Thursday, July 13, 2006

STATE TAX COMMISSIONER CORY FONG OPPOSES PROPOSED FEDERAL TAX LEGISLATION

BISMARCK, N.D. – State Tax Commissioner Cory Fong has contacted North Dakota’s Congressional Delegation in opposition to proposed federal legislation that would limit a state’s right to create its own tax policy.

The legislation would also affect the State’s business activity taxes by mandating from Washington how states can tax their multi-state firms. Small states, like North Dakota, could see a significant drop in out-of-state business tax collections.

According to Fong, “Whenever Washington attempts to intervene in the ability of a state to write its own tax policy it is bad news for the state. We need to do more to protect the rights of the state to determine tax policy and not submit to out-of-state forces that would use these loopholes for their own gain.”

Fong added that one of the provisions that is especially troubling is that an out-of-state company may transact business in a state for up to 21 days without being subject to business activities taxes. Locally owned businesses would not enjoy such an opportunity to do business tax free and would be at a competitive disadvantage.

“This ultimately amounts to a tax increase on our Main Street businesses because the reductions in taxes paid by out-of-state companies would shift the tax burden to local businesses in order to maintain state services. This is potentially harmful for North Dakota’s brick-and-mortar business sector -- the businesses that are here, and have been here, serving our communities in so many ways. I am strongly opposed to the state losing its ability to determine the appropriate level of taxation for all of the businesses operating here.”

Fong said he opposes the legislation that is currently winding its way through Congress because it reverses the trend by Congress in recent years to close abusive tax loopholes and promote more accountability by corporations. The National Governor’s Association has also gone on record opposing the legislation indicating that the states run the risk of losing $6.6 billion in tax revenues in the first year alone if the legislation was passed and became effective.

North Dakota’s Representative Earl Pomeroy and Senators Kent Conrad and Byron Dorgan, both of whom previously served as State Tax Commissioner, have responded to Fong expressing their appreciation for his communication along with their concern and sensitivity to this kind of preemptive tax legislation.

“The changes in the business activity tax have a negative impact on our tax collections for the state,” said Fong. “The bottom line is, this legislation infringes on states’ rights to set tax policy. It’s unnecessary, it’s harmful to states, and it’s wrong.”

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