North Carolina’s revenue forecast confirms the importance of the income tax

The revised revenue forecast released today demonstrates how important the income tax is to our state’s ability to make investments that boost our economy. As legislators begin building the next state budget, they should protect the income tax, not scale it back or eliminate it as some have proposed.

The revenue forecast indicates that tax collections since the beginning of 2013 are on target to pay for critical services included in the Fiscal Year 2012-13 budget, thanks to the revenue generated by the personal income tax. The personal income tax has been the most consistent source of revenue to pay for education, transportation, and public safety in North Carolina, and recovered quickly after the Great Recession, according to the report released today by the non-partisan Fiscal Research Division.

Sales taxes have not rebounded nearly as well because consumer demand continues to be weighed down by economic concerns, including the state’s high unemployment rate.

Revenue predictions also remain tenuous because of legislators’ decision to give businesses a $50,000 tax cut. This tax break for large, profitable businesses and wealthy individuals will cost the state an estimated $460 million, far more than was originally estimated.  The tax cut could cost even more in future years as more businesses take advantage of it.

3 Comments

  1. Doug

    April 23, 2013 at 3:19 pm

    “cost the state an estimated $460 million”??? Do you mean let these businesses etc. keep $460 million to invest in the state? That’s what I thought. Just think of how many things these businesses invested in with half a billion dollars, and how that is likely keeping some people off the government dole, and paying taxes themselves. Now we know they did not all directly hire someone, but that translates into about 10,700 people that would have salaries….without even considering the effect of those 10,000 performing some kind of economic activity.

    Just think if government had confiscated that money and the increasing unemployement that would have happened. Thank goodness we have lowered the taxes going forward so the economic activity can keep these businesses profitable…..you see if the business is not profitable they are not paying taxes, hiring people, making investments.

  2. Jeremy S.

    April 23, 2013 at 3:35 pm

    Sounds like Doug needs to watch what a billionaire capitalist thinks about taxing the rich: http://youtu.be/bBx2Y5HhplI.

    Shorter version: if giving away the store in the form of huge tax breaks for big business and the rich created jobs, wouldn’t we be drowning in jobs?

  3. Frances Jenkins

    April 23, 2013 at 5:55 pm

    It is a job killer.