Redistributing the tax dollars of the state’s wealthiest taxpayers (66 percent of all capital gains income in the state are held by taxpayers in the top 1 percent) to all taxpayers may sound appealing to Senator Berger, but our families, communities, and economy would be a lot better off if they invest those dollars in schools that remain underfunded, people who can’t get the health care they need, and our water that is literally poisonous.
Senator Berger’s redistribution proposal won’t permanently fix the state’s upside-down tax code, either, given the one-time nature of these dollars.
With the announcement that the state may have a larger than projected over-collection of revenue that can help to meet the backlog of unmet needs in classrooms and communities, it is time for legislative leaders to get to work on finalizing a budget that better reflects the priorities of leadership looking to move our state ahead and account for how they will spend those dollars in the next year.
Economists from both the General Assembly’s Fiscal Research Division and the Office of State Budget and Management found this spring that the $896 million more in revenue over projections was due primarily to larger than expected increases in capital gains income. Wage and salary income performed at projected growth levels. States across the country have experienced similar unexpected increases in their revenue, largely from the same source, although also from corporate profits. These increases are also happening in states that have not recently cut taxes and in states that recently have increased tax rates like Minnesota.
In the face of growing income inequality where the top 1 percent have incomes 20 times that of the bottom 99 percent, these additional dollars should be driven into breaking down barriers to more equitable outcomes in our state.
Instead of concocting ever more complicated schemes to constrain opportunity in our communities, Senator Berger and Speaker Moore should work with members on both sides of the aisle to put forward a budget that deploys these dollars for the public good.
A check for a few hundred dollars won’t provide more 4-year-olds with the chance to be ready for Kindergarten and receive all of the benefits of a quality early childhood education.
A check for a few hundred dollars won’t clean up our waterways.
A check for a few hundred dollars won’t keep community college or public universities affordable for students and anchors of engaged learning, research, and development in our communities.
Most significantly, a check for a few hundred dollars won’t undo the disproportionate tax cuts that have been given to the wealthy and big companies since 2013.
The 80 percent of North Carolina taxpayers who have only received 30 percent of the net tax cuts to date to date will recognize proposal of a tax refund for the political gamesmanship that it is rather than a serious consideration of how to steward our tax dollars and do so fairly. It’s ironic that Senator Berger wants to dangle a one-time refund of a few hundred bucks in front of North Carolinians while trying to force more big tax cuts for corporations into the tax code for good.
The reality remains that the state will still have $900 million less this fiscal year because of the full cost of income and corporate tax rate reductions that began on January 1. In total, the state tax code is still bringing in at least $3.6 billion less than the pre-2013 tax code would have under current conditions.
Compounding this fiscal mess by failing to finalize a budget when a reasonable counteroffer is on the table makes it clear that legislative leaders aren’t working for our collective well-being – they’re working to maintain a fiscal approach that will continue to benefit the rich and hold all of us all back.