Senate tax-cut plan too risky for state

Published March 29, 2015

Editorial by Rocky Mount Telegram, March 28, 2015.

While their counterparts in the N.C. House last week were sensibly working to restore the historic preservation tax credit program, Republican leaders in the N.C. Senate unveiled a dubious plan to cut personal and corporate income taxes by $1 billion.

The announcement came a little more than a month after the legislature’s Fiscal Research division and the Office of State Budget and Management reported that the state is facing a $271 million budget shortfall for the current fiscal year.

That shortfall is largely a product of the legislature’s tax cuts of 2013, which were supposed to spur economic activity that would in turn lead to the state collecting at least the same amount of revenue as it would have under the higher, previous tax rates.

Unfortunately, that didn’t work.

But Senate Republicans seek to double down on that proposition by cutting the personal income tax rate to 5.625 percent in 2016 and 5.5 percent in 2017 and the corporate tax rate to 4.5 percent in 2016 and 4 percent in 2017. The corporate tax cuts would kick in whether or not revenues hit the levels required by the 2013 tax law to lower corporate rates.

The budget plan Gov. Pat McCrory submitted earlier this year included no new round of tax cuts. And House leaders have seemed cool to the Senate’s ambitious tax-cutting scheme but have so far had little to say about it.

As the state continues to grapple with revenue shortfalls and funding for schools, universities and the court system continues to be squeezed, this is no time for lawmakers to gamble on an already uncertain and unreliable revenue stream.

March 29, 2015 at 1:15 pm
Norm Kelly says:

How do we know this editorial is written by a lib media ally of the demon party? Simple. The tax plan desired/proposed by Republicans in the state Senate is referred to as a 'scheme'. If it were a conservative writing about the idea, it would be referred to as a 'plan'. If it were a tax increase on 'the wealthy' being proposed by lib allies, the author would refer to it as a 'plan'. But this is a tax cut proposed by Republicans, something that is never proposed by libs, never supported by libs, always despised by libs and their allies. It's considered illegal by libs for people to keep money they earn.

Economic incentives, though, are loved by libs. It's a scheme where pols get to play games with other peoples money to reward companies that are desired by lib pols to expand or move here. Economic incentives should be targeted to a specific audience, just as tax cuts are targeted by libs to specific groups or the way 'benefits' are targeted to specific groups that libs desire to have vote for them. If the business tax rate is lowered so ALL businesses benefit and are allowed to spur economic activity in the state, this is a bad idea, a 'scheme'. Because all businesses get to benefit and not just the ones liked/bribed by lib pols? Is it just possible that businesses would find NC a desirable place to do business if the tax rate is low as well as our 'infrastructure' is kept in good working order? If more businesses choose to do business here, wouldn't that increase revenue to the state? Of course, but if it involves a tax cut of any variety, it will most definitely NOT be supported by libs and their media allies! Power to the people, not power to the pols!

March 29, 2015 at 1:32 pm
Richard L Bunce says: