North Carolina Could Lower the State Maximum Income Tax
Vote to see how others feel about this issue
What the Referendum Does
The North Carolina Income Tax Cap Amendment would amend the state’s constitution to lower the state’s maximum allowable income tax rate from 10 to 7 percent.
In Favor
North Carolina’s income tax cap should be lowered from 10 to 7 percent under the state constitution. Lower income tax rates attract workers and businesses, bolstering states’ economies. Decreasing taxpayers’ economic burden helps states compete for talent, and attracts workers and businesses from high-tax states.
Opposed
This tax break for the wealthy will increase North Carolina’s reliance on sales and property taxes, which disproportionately impact middle-class and poor citizens. It’ll also make it difficult for politicians to respond to the state’s budget needs. A constitutional amendment to lock in a low tax rate is simply too radical.
In-Depth
Americans for Prosperity-North Carolina (AFP-NC), along with multiple Republican state legislators and the Civitas Institute, supports this ballot measure. Chris McCoy, AFP-NC’s state director, says:
“AFP-NC strongly supports the Income Tax Cap amendment because it empowers voters to protect themselves from future tax hikes. If a [lower] tax rate were bad for education, you would think we’d see some evidence of those ill effects right now, since our tax rate is currently [5.499%]. But over the last five years, North Carolina has made consistent investments in education while lowering the economic burden on taxpayers. We support the income tax cap amendment, and we believe voters will too."
The Civitas Institute adds that fiscal conservatism is beneficial to states’ economies, as it helps attract productive residents and businesses:
“States that have their fiscal house in order are reaping the benefits, all the more if a state can virtually guarantee lower taxes. Texas continually made national headlines recently, especially under former Gov. Rick Perry, for aggressively recruiting businesses and their workers to leave California for low tax Texas. The ‘Lone Star State’ does not have a state income tax. States with bloated expenditures and debt are not only losing businesses, but shedding many of their most productive citizens… North Carolina has worked hard in recent years to be a model of fiscal conservative policy, [and] this amendment signals businesses and residents that those policies are less likely to change. It’s a great idea to reinforce lower taxes in our state constitution and to remind people that government can – and should – only do so much… By limiting taxes we place limits on government, powerfully reminding our representatives in North Carolina that their sphere is limited and our power over them is not.”
The North Carolina Democratic Party, Gov. Roy Cooper (D), Public School Forum of North Carolina, North Carolina Justice Center, N.C. Business Council, ACLU of North Carolina, and North Carolina Center for Nonprofits oppose this bill. North Carolina Justice Center argues that this proposal’s use of a constitutional amendment to freeze the state’s top personal income tax rate at a specific level is too radical (of the 41 states with income taxes, Georgia is the only one that used its constitution to lock in a specific low rate).
North Carolina Justice Center adds that this proposal: 1) serves as a tax break for the wealthy and powerful, 2) increases North Carolina’s reliance on sales and property taxes, which disproportionately affect middle-class and lower citizens, 3) jeopardizes North Carolina’s ability to meet both current and future budgetary needs, and 4) ties future legislators’ hands and makes it more difficult for them to craft effective policy.
The North Carolina legislature referred this constitutional amendment to voters after mostly party-line votes in the House (73-45) and Senate (34-13).
Summary by Lorelei Yang
(Photo Credit: iStockphoto.com / filmfoto)
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