BTC: McCrory needs to get specific on taxes
STATEMENT FROM THE BUDGET & TAX CENTER:
McCrory needs to get specific on tax reform
RALEIGH (February 18, 2013) – Governor McCrory didn’t provide specifics for how he would realize his vision for North Carolina this evening. And while his vision for North Carolina — a high quality of life for all, revitalized communities and infrastructure, globally competitive businesses — is admirable, whether we get there will depend on how policymakers pursue that vision.
The devil certainly will be in the details.
In no policy area is that more clear than the debate over tax reform. Governor McCrory provided only high-level comments about his tax plan, signaling that he would lower tax rates, close loopholes, and maintain the current level of revenue the state collects. The Governor explicitly voiced his commitment to ensuring that the state can support quality education, sound infrastructure, and community safety and well being — the true foundation for economic growth. Yet the question remains: will it be possible?
Basic math tells us that he will either need to close a significant number of loopholes or shift to other tax sources if he hopes to lower rates and achieve revenue neutrality. Set aside for a moment that revenue neutrality would keep in place an already diminished baseline, more than 11 percent below pre-recession levels. The plans already on the table tell us that legislators are planning to rely on the sales tax to support their income tax reductions or eliminations. As such, these plans would shift the tax load to hardworking North Carolinians while providing tax cuts to the wealthy. Over time, this approach would also erode the state’s ability to fulfill the Governor’s commitment to support schools and infrastructure.
North Carolina needs to rebuild after the Great Recession and the cuts that have been made to the key investments that are the foundation of a strong economy. Yet, the facts and historical evidence make clear that tax cuts or elimination of tax sources is no way to effectively create the jobs the state needs or spur economic growth. Tax cuts are unlikely to encourage hiring by small businesses and will only serve to widen the income gap and undercut economic security for families and our state.
We look forward to hearing more specifics from Governor McCrory. We look forward to an approach that will deliver on our shared vision for an even better North Carolina.
FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, Budget & Tax Center Director, firstname.lastname@example.org; Jeff Shaw, email@example.com, 503.551.3615 (cell).