Income Tax Cap Amendment
North Carolina has one of the lowest tax rates in the southeast. The NC income tax rate has declined steadily over the past 15 years, from 8.25% to our current rate of 5.5%. There was an astounding drop of almost 2% from 2013 to 2014, when the legislature moved from a marginal tax rate to a flat tax rate. Marginal tax rates increase the tax rate as the level of income increases. Translation: Marginal tax rates make wealthier people pay more in taxes than poor people; conversely, poor people pay less in taxes than rich people. With a flat tax rate, everyone pays the same tax rate, regardless of income.
Education, infrastructure and social services have been underfunded correspondingly over the same time period, while property taxes, sales taxes, local taxes, and fees have steadily increased. Education is the largest expense in the NC budget. North Carolina ranks 37th in the country in teacher pay, and 39th in per pupil spending.
Our current law puts a cap on the most amount that any NC resident could pay at 10%. The NC legislature started out their discussion at changing this to 5%, but saner voices won out, changing this to 7%. This is the current language in Senate Bill 75.
Of the 41 states that have an income tax, Georgia is the only state to have it in their constitution. Both Kansas and Ohio have experimented with supply-side tax policy and austerity budgets and found the results to be dismal. Results were slashed education budgets, downturns in economy, businesses, vital services and downgrades to bond ratings. In 2017, Kansas abandoned their five year experiment and returned tax levels to where they had previously been. A Colorado county just reduced their school schedule to 4 days a week. Not only is there compelling evidence that cutting taxes does not enhance state economic performance, there is ample evidence to prove that cutting education budgets results teachers having to buy their own school supplies and having to hold two jobs to make ends meet.
The Income Tax Cap, or as critics call it, the Nickel-and-Dime the Middle Class, amendment, will read as follows on the ballot:
[ ] FOR [ ] AGAINST
Constitutional amendment to reduce the income tax rate in North Carolina to a maximum allowable rate of seven percent (7%)
So, we’ll all be guaranteed forever of paying less taxes because it will be in the constitution if passed. What could possibly go wrong?
Once more, I ask you to look past the words you will see and ask yourself, “What could this mean for North Carolina, for me, and my family?” We have already lost state revenue by going from a marginal (incremental) tax rate to a flat tax rate. Our current cap of 10% leaves us room to respond to emergencies and economic disasters. 7% does not. Now they want to make sure that all of us, including wealthy North Carolinians never pay more than 7%. This could result in further budget cuts, leading us to fiscal downturns and their consequences.
Apple just stated that these back and forth lawsuits over the constitutional amendments and political deception might point to economic instability (drama) and cause them to reconsider building their next office in North Carolina.
What has happened to the common good? Where everyone pays their fair share to create a thriving environment for all citizens? Where we believe that it is in all of best interests to increase all standards of living in balance with sustainable profits? Where a rising tide floats all boats.
· Republicans believe that they have the right to put amendments on the ballot for citizens to vote for.
· “This would limit the income tax to a level lower than the state’s wealthiest taxpayers paid before 2013. This proposal is a permanent tax shift to help the rich.
· This change would hinder the state’s ability to fund vital public needs, like roads and schools.
· To make up for the lost income tax revenue, lawmakers will be forced to increase taxes elsewhere, including property and sales taxes, which more frequently burden working and lower income voters.” Democracy NC
· Since lower income taxpayers spend more of their income and wealthier taxpayers invest more and spend less of their money, this amendment unfairly targets lower income citizens and is a gift to the wealthy.
· This amendment will continue slashing education budgets and further starve the public schools
· This amendment kills any chance that current and future legislatures could respond to state emergencies or economic downturns, or simply decide that austerity is not in the best interest of North Carolinians and our collective future. Don’t we want a prepared and well educated populace and a stable, thriving economy?
· “Constitutionally limiting the income tax rate would put more money into the pockets of the wealthiest households and largest, most profitable corporations – while investment in the common good declines.
· This radical step would ignore the overwhelming evidence that tax cuts don’t create jobs and boost the economy, and would drain the state of the resources to invest in broad prosperity.” Budget and Tax Center
· If passed, this would result in approximately $1.9 BILLION dollar loss annually to North Carolina for ensuring our quality of life.
This amendment boils down to a ploy to constitutionally guarantee the wealthy more money and shift the tax burden to lower and middle income taxpayers. It is also an incentive to get Republicans to the polls for a midterm election where they stand to lose. Raleigh-based Public Policy Polling asked voters their opinion of the General Assembly earlier this year and the results were fairly dismal. It found that less than one-in-five North Carolina voters (19%) approved of the job the legislature was doing, while more than half (51%) disapproved.