Be sure to check out attorney/CPA Richard Nordan’s outstanding op-ed critiquing the proposed state income tax cap that will appear on the fall ballot in today’s edition of Raleigh’s News & Observer. In “Reject the NC tax cap. It will hurt government and most taxpayers.” Nordan first blasts the two infamous experiments with similar caps (California’s ill-fated Proposition 13 and Colorado’s disastrous “TABOR” amendment).
He then goes on to say this:
“These constitutional tax caps deprive elected officials of the flexibility they need to answer the crises of the day. The caps also deprive future electorates from expressing their collective philosophy through the election process.
Moreover, by zeroing in on the income tax, this constitutional amendment would guarantee that if increased revenues are needed in the future, the legislature would be looking at the sales tax or property tax to make up the difference.
From the standpoint of the citizens, the property tax is the most blunt form of taxation. Most people will owe the total annual tax liability even if they got sick or lost their job. This is not a supple form of taxation.
The sales tax is regressive. Its burden grows heavier the lower your income.
The income tax, on the other hand, does change with your financial circumstances.. If you lost your job due to illness, were laid off or took time off to care for a child or aging parent, your income and hence your tax liability will go down.
From the standpoint of the state, this constitutional amendment will make it harder for future sessions of the legislature to grapple with the fiscal and economic conditions of the day or natural disasters, tying their hands to our collective state of mind in 2018.
From the standpoint of the citizen/taxpayer, this amendment makes it more likely that state and local governments will rely upon sales taxes and property taxes if increased revenues are needed in the future. These forms of taxation are less sensitive to the current income of the taxpayer.
The tax cap amendment is a lose-lose proposition for the government and the taxpayer and should be rejected.”