North Dakota's economy is the strongest in the nation, according to Expert Market, a business services firm. Analysts came to that conclusion after comparing unemployment rates, housing values, GDP per capita, entrepreneurial talent, household incomes, and startup density in all 50 states.
Unfortunately, Congress' upcoming tax reforms could put North Dakotans' bright future at risk. Some Democrats are already proposing punishing energy producers with a tax on carbon emissions. But if federal lawmakers choose to raise taxes on the energy industry, state residents can kiss their prosperous economy and booming job market goodbye.
North Dakota has oil and natural gas to thank for its recent economic gains. Since hydraulic fracturing helped energy firms tap into the Bakken shale, an underground rock formation containing huge deposits of natural gas and oil, the state's energy production has taken off. By the end of 2014, daily oil production was five times higher than it was in January of 2010.
As production rose, so did the state's economic outlook. Oil's share of the state economy has jumped from 2 to 16 percent since 2004. In that same time period, the state's GDP almost tripled.
The energy industry brings high paying jobs to the state. It supported more than 70,000 jobs in 2015.
Oil and gas companies also paid over $3.2 billion in state and local taxes as of 2014.
Such contributions help inject North Dakota's communities with much-needed funding. Partly due to revenue from the oil industry, McKenzie County has increased its road infrastructure budget from $8 million to over $64 million in the last seven years.
Nationwide, oil and natural gas companies pay over $70 million in federal taxes each day. American energy companies pay the government 37 percent of their pre-tax net income, far higher than the 25.8 percent average in other major industries.
Congress will likely seek ways to raise additional revenue from the industry to pay for tax reform. There are two ways lawmakers could extract more tax money from oil and natural gas firms.
The first way is to hit energy firms with punitive taxes. Higher taxes on energy could kill almost 200,000 jobs nationwide within one year -- a truth that voters readily understand. Seven in 10 voters polled after the 2016 election said they would oppose job-killing new taxes on domestic oil production.
The second, and smartest, way is to make it easier for energy firms to prosper.
Pro-growth energy policies increase firms' revenue -- and therefore increase their tax bills. Loosening regulations on oil and natural gas production would increase government revenue by $100 billion over a decade.
Such pro-growth policies, like speedily approving pipelines, would also help create more than 2 million additional jobs by 2035.
Those policies would help all Americans, not just those who live in energy-rich states like North Dakota. When oil production rises, prices at the pump fall. Compared to 2014, increased oil production saved the average American driver $550 in 2015. This summer, rising oil production has kept gas prices steady, even during periods of peak demand. Levying taxes on the energy industry, however, would raise energy costs nationwide.
North Dakota's booming energy production has improved the economic prospects of families across the state and nation. Allowing oil and natural gas companies to expand without a heavy tax burden is a sound investment for the public, the energy sector, and the government alike.