Tax cap amendment unwise, politically motivated say N.C. business owners

A group of North Carolina business owners spoke out Tuesday against a constitutional amendment to cap the state income tax rate at 5.5 percent.

In a press teleconference arranged by the North Carolina Business Council, a number of owners said the amendment, which would be put on the ballot in November, would hem in state leaders in times of crisis.

“One thing I’ve learned about business is we never know what the future is going to be,” said Eric Henry, chairman of the council and owner of TS Designs in Burlington. “So we need to keep our options open. When things happen we need to have the ability to change and adapt.”

“By putting a cap on our state income tax, basically handicaps our legislators in the future to addressing what might pop up,” Henry said. “It could be a hurricane. It could be education. We don’t know what the future is. So why do we want to go down the path of putting this essentially handcuff on our legislators to keep them from doing what’s best for the state?”

The current individual income tax rate is capped at 10 percent, according to the state constitution. The rate is set to be 5.25 percent in 2019. Revenue from income taxes accounts for over $12 billion, more than half of the state budget.

Without the option to raise the income tax in times of crisis and emergency, Democratic lawmakers have argued, things like property taxes, sales tax and user fees would have to go up when the state and counties need additional resources. Those are the taxes that have the greatest impact on poor North Carolinians.

Business owners stressed that point Tuesday.

Barbara Hemphill, whose Productive Environment Institute helps to train business owners to succeed, said the amendment would hurt the ability of small businesses in the state to adapt to  changing economic circumstances and business environments.

“It makes absolutely no sense to say ahead of time we’re going to put a cap on this because don’t know what’s going to happen,” Hemphill said. “We used to make ten year business plans or five year business plans. We can’t even do that anymore because demands change so quickly.”

Bruce Nelson, former CEO of Officer Depot and owner of Reverence Farms in Graham, agreed.
“From my perspective both as a former chairman and CEO of a large public company and now as a small business entrepreneur, placing a constitutional cap on our state income tax rate will have serious, long term negative economic and social implications,” Nelson said.

“Like any business – big or small, public or private – our state economy is subject to unforeseen and unpredictable future changes. Our elected policy makers at the time must have at their disposal a variety of tools to effectively respond to changing economic landscapes.”

Democratic lawmakers have suggested the amendment – and others headed for the November ballot – is meant to drive conservative voters to the polls in a political season that could, with Democratic momentum building, threaten the current Republican supermajority in the General Assembly. Nelson echoed that concern Tuesday.

“In my opinion, proposing a constitutional tax cap is fiscally irresponsible, economically unsound and politically motivated by a North Carolina legislative body more concerned over the prospect of losing their super majority in the next election cycle,” Nelson said. “It’s bad for business. It’s bad for an economy. It’s bad for the citizens of North Carolina.”

The proposed amendment has already become a political battleground going into November’s election.

Last week the conservative group Americans for Prosperity announced it is organizing its volunteers and staff to call more than 100,000 North Carolinians, urging them to contac ttheir lawmakers to support the amendment. The group also announced a media buy to drive support for the amendment and raise public awareness of the issue, which could encourage more conservative turnout.

State Senate President Pro Tempore Phil Berger (R-Rockingham) also issued a press release challenging Gov. Roy Cooper, a Democrat, to support the bill and framing any opposition as a desire to raise taxes.

“Since he says he doesn’t want to raise taxes, he should enthusiastically support this proposal,” Berger said in the statement. “If not, it will reinforce why this amendment is needed to keep spendthrift politicians from returning to the days of high taxes and multi-billion dollar deficits.”

One Comment

  1. Marty Clemons

    June 21, 2018 at 10:28 am

    Way to go Eric Henry! This article should say Republicans suggested the amendment, not Democrats. In Chicago they keep raising property tax rates and people are fleeing. Capping the income tax rate by Constititional Amendment is absurd and politically motivated.

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