NC Budget and Tax Center

Senate tax plan would double down on further tax cuts, hold back reinvestment

The state Senate unveiled a proposal yesterday that would take the modest revenue gains that our state is experiencing and give them away in the form of tax cuts rather than reinvest them in the building blocks of community well-being. That would be a mistake. Lawmakers already deeply cut revenue collections in 2013 and this plan would double down on those cuts and flawed strategy.

The proposal would hand out more costly tax cuts to large, profitable corporations, lower the personal income tax for the third time, and slightly expand the sales tax to more services—all at the expense of everyday North Carolinians. It will neither enable the state to replace the worst cuts enacted in the aftermath of the recession nor restore the state’s economy to a sound footing, as my colleague explained yesterday.

The cost of the Senate leadership’s proposal grows to nearly $1.1 billion per year once the plan is fully phased in.* That cost is roughly the amount of money that the state invests in the entire Community College system, which serves all 100 counties and is tasked with preparing today and tomorrow’s workforce. Over the next biennium alone, revenue losses would total $951 million. That means a lost opportunity to catch up, rebuild, and keep up with the needs of children, families, and communities across the state.

All North Carolinians will the pay price. The graphic below illustrates the potential reach of those revenues and highlights how the revenue could instead be reinvested in things that benefit us all.

Senate Tax Plan Graphic

Senators need to put families and communities first by investing more resources, not fewer, in things like early childhood education and resources that allow public schools to succeed, like well-paid teachers, internet connectivity, and modern textbooks. They need to make college and housing more affordable, improve access to job training, and aid the development of struggling rural economies. And they need to put resources towards helping our seniors remain independent and allow them to continue living at home—things like home-health care services and Meals on Wheels.  These are but a few of the kinds of steps our state should be taking.

The bottom line is that we would have significantly more revenue if not for the 2013 tax plan. Now, the Senate wants to compound that reality with another round of costly tax cuts. This is a flawed strategy that ignores how our schools are hurting, public health and judicial infrastructures are crumbling, and millions of North Carolinians are struggling to pay the bills due to the cracks in our opportunity structure.

*This estimate includes the fiscal impact of replacing the corporate income tax rate triggers with guaranteed rate cuts.

One Comment


  1. LayintheSmakDown

    June 15, 2015 at 9:31 pm

    I know it does not fit your narrative, but you need to mention the expansion of the standard deduction and the reinstatement of some of the tax deductions from the federal return. This will benefit many of your “diverse” progressive clientele and not help eviscerate Republicans (Blueprint marching orders…I know) but it will put even larger tax cuts into all citizens’ pockets So much for the tired trope of “only tax cuts for the rich” that is overplayed around here.

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