Today, the House Finance committee favorably approved its proposed substitute version of a tax plan that the Senate Finance committee passed earlier this month. While continuing the trend of more tax cuts, one positive takeaway is that the House tax plan does not include more corporate or personal income tax cuts – unlike the Senate’s tax plan, which further reduces tax rates that largely benefit the state’s highest income taxpayers and profitable corporations.
Perhaps most important in the committee meeting, however, was an extended and important debate about the state’s priorities and the consequences of tax choices on the ability of North Carolina to meet growing needs.
This particular debate arose from a proposed amendment to the tax plan that would dedicate revenue from the deed stamp tax to parks, recreation, and environmental initiatives. While acknowledging the importance of these investments and many others, House Finance committee members highlighted the challenge of dedicating revenue sources to specific purposes. When revenue comes in above projections, a lack of revenue availability would mean that policymakers would not be able to shift dollars to emerging priorities, for example. Furthermore, reducing General Fund dollars amid existing priorities in education, health and infrastructure likely means that these needs will continue to go unmet.
House Finance members did not acknowledge the broader context in which the tax plan was debated, however. Particularly, the state is operating under a tax code that is failing to adequately meet the range of needs in a state with a growing and aging population, unanticipated needs like rebuilding from Hurricane Matthew, a changing economy that is creating job loss and retraining needs, and redevelopment priorities in rural communities. BTC estimates that the state would have had $2.8 billion more today to invest in these priorities if the old tax code was in place. Read more