Unfair give and take

When senators say give and take, the public should beware. They sometimes mean taking from some to give to others. This bill is no exception.

It continues to cut corporate income-tax rates, granting massive savings to the state’s largest and most profitable businesses. The personal income-tax rate also will drop further, cutting more from the tax bills of top earners.

This time, perhaps recognizing that earlier “tax reform” yielded virtually no benefits for middle-class and poor North Carolinians, senators added some provisions to give them a little relief. But only in terms of the income tax. New sales taxes on services could offset income-tax savings. Higher charges for driver’s licenses, a new gas-tax formula that will cost motorists more and other fees will dig into pocketbooks.

Berger said in a news release that taxing more services would allow the state to “continue the goal of moving away from unfair and burdensome taxes on property and income.” Unfortunately, that’s just from one perspective.

As the state cuts taxes, it also passes more costs to local governments — many of which are having to raise their property tax rates to compensate. This is happening even in counties where Republicans have a majority, such as Catawba and Alamance. Taxpayers don’t get a break if state tax cuts force local tax increases. Alamance County commissioners voted 4-1 last week to raise their property tax rate by 5 cents, granting a large funding increase to schools. Guilford County has avoided a property tax hike, but only by denying most of the school board’s funding requests year after year.

The Senate also added a substantial wealth-redistribution scheme to the bill. This changes the formula for allocating sales-tax revenues. Instead of returning most revenue to the counties where it originates, the new formula would allocate most revenue according to population. The effect would be to transfer money from counties with large retail centers to counties without.

When senators have discussed this change, they’ve noted there are “two North Carolinas” — one urban and relatively prosperous, the other consisting of small towns and rural areas that are suffering financially. While that is a concern, redistributionist policies, which normally are anathema to Republicans, aren’t productive. They threaten to throttle down the state’s economic engines, forcing them to raise local taxes even more or cut services — which can slow business development and job creation. In turn, that will depress state revenues. While it may give temporary relief to poorer counties, better strategies for them is to create greater incentives for new business and industry. The Senate bill doesn’t include much in the way of incentives, and doesn’t even allow counties receiving redistributed sales-tax revenue to use it for economic development.

The problem with the Senate’s approach since Republicans took control of the legislature in 2011 is that it favors state government over local governments; big corporations and the wealthy over ordinary taxpayers; and rural counties (where most Republican senators live) over urban counties.

Instead, the state needs balanced policies that spread costs equitably and seek to provide benefits equitably. There is too much give to some and take from others in this plan. It’s a sausage stuffed with too many unsavory ingredients.

http://www.greensboro.com/opinion/n_and_r_editorials/unfair-give-and-take/article_c06c5268-15fd-11e5-934b-6b84310b6513.html