Uncategorized

Temporary taxes to end the stalemate? Let’s hope not.

According to one recent media report, the NC House has a new idea for breaking the revenue stalemate – temporary tax increases.

If this is the case, it is a disappointing development considering that the Senate, House and Governor so far have all presented versions of permanent, reform-minded revenue packages that will not only help to raise the revenues needed for the next few years but will also create a more stable and fair tax system for the future.

There is emerging consensus amongst economists that the recovery will be “L-shaped” (or at best “U-shaped”) rather than “V-shaped.” In other words, it is going to be a while before the economy turns around. And history has shown us that revenue recovery lags economic recovery. The General Assembly’s chief economist, Barry Boardman, told legislators last month that it will be 2013-2014 at the earliest before North Carolina’s tax system is able to generate the same amount of revenue that it was projected to generate just last year.

Following the 2001 recession states faced shortfalls for four consecutive years (FYs 2002 through 2005). Given the severity of the current recession, the magnitude of the resulting budget gaps, and the likely trajectory of the economic recovery, it is hard to imagine that the state’s budget problems won’t continue for at least 3 more years, probably more like 5-6, or even longer. And, keep in mind that the federal recovery dollars the state has received will expire after FY10-11.

If members of the General Assembly don’t want to keep coming back year after year and going through the painful process of renewing temporary taxes (ala 2003, 2005 and 2007) they should enact permanent, reform-minded measures now, not quick fixes that only postpone the real work.

One Comment


  1. […] generate the same amount of revenue that it was projected to … Here is the original post:  The Progressive Pulse – Temporary taxes to end the stalemate … This entry is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 […]

Check Also

Details of the Latest Tax Package

Last week, budget negotiators announced that they had ...

Top Stories from NCPW

  • News
  • Commentary

“I could choose to do anything else with $50.” But Anca Stefan, a high school English teacher in a D [...]

The Cape Fear River is damaged, contaminated by decades of human malfeasance, negligence and ignoran [...]

Legislative Services Officer Paul Coble appears to be violating the state public records law and is [...]

This morning, the state Supreme Court will hear oral arguments in the pivotal case of Silver, et al. [...]

These are extraordinary times in the American experiment with representative democracy. In Washingto [...]

Public education in North Carolina has its share of challenges, not the least of which has been the [...]

The post Time to come clean appeared first on NC Policy Watch. [...]

Tax Day in 2018 in North Carolina presents an opportunity to make sure our tax code allows us to mee [...]

Now hiring

NC Policy Watch is now hiring a Managing Editor – click here for more info.