Senate tax plan would continue down a path to nowhere

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June 11, 2015
In Falling Behind in NC, NC Budget and Tax Center, Raising the Bar 2015

A tax plan state Senate leaders presented this week would promote neither shared economic opportunity nor prosperity across North Carolina. Far from it.

The proposal would cost more than $1 billion in annual revenue loss as the tax plan continues down the path of handing out more costly tax cuts to large, profitable corporations at the expense of everyday North Carolinians. This approach won’t restore the state’s economy to a sound footing.

The proposed tax plan does nothing about persistent stagnant wages, an uneven economic recovery in which all gains are going to the wealthiest North Carolinians, and the lack of economic and job growth in many parts of the state. Senate leaders would pay for only a portion of the income tax cuts by having North Carolinians pay more in sales taxes, which hit people making relatively low incomes the hardest. And the state would continue to walk away from its responsibility to make much-needed investments in our public schools, public colleges and universities, repair the state’s eroding infrastructure, and other building blocks of a strong economy.

Key aspects of the Senate tax plan stand out as strong reasons why its adoption would fail to promote broad prosperity.

  • The proposal’s reduction of the personal income tax rate to 5.5 percent from 5.75 percent has no benefits to the state’s economy or its competitiveness. At the cost of much-needed public revenue, the tax rate cut won’t drive significant job creation, motivate businesses or people to locate in North Carolina or encourage local investment. Not only do income tax rates affect these factors negligibly, if at all, North Carolina’s personal income tax rate is already in line with the region’s, falling in the middle among southeast states.
  • While putting a limit on how much in itemized deductions a taxpayer can claim is good policy, using the added revenue this produces to reduce tax rates isn’t. Because this proposal would place all itemized deductions—mortgage interest, charitable contributions, medical expenses, etc.—under the cap, it creates greater equity in the treatment of taxpayers. Capping itemized deductions reduces revenue loss from these deductions and helps address inequities in the tax code, as wealthier taxpayers typically benefit more from deductions.
  • Increasing the standard deduction is a wasteful way to address the problem of too many North Carolinians struggling to make ends meet because it deprives the state of much-needed public resources that could boost public investments that promote economic growth. A better way to help hard-working taxpayers keep more of what they earn is to adopt a strong refundable state EITC to help offset not only income taxes, but sales and property taxes that fall hardest on those with lower incomes.

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Raise the Bar: Paying more for less in higher education

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May 26, 2015
In 2015 Fiscal Year State Budget, NC Budget and Tax Center, Raising the Bar 2015

This post is part of a series on the budget featuring the voices of North Carolina experts on what our state needs to progress.  Elizabeth Grace Brown is a student at UNC Chapel Hill and is the author of this piece.

I’ve spent my entire educational life in North Carolina public schools, from kindergarten to today. My schools have always been excellent. I had good classroom sizes, dedicated and attentive teachers, and curricula rich in science, arts and literature. My schools strove to maintain a balance between supporting and challenging me. The guidance I received from teachers and faculty (and from my mother, who’s also a public school teacher in NC) led me to UNC Chapel Hill. But as I grew older and closer to graduation, I could already see that quality eroding. My elementary school’s magnet status was threatened, my high school had no books for us, teachers quit and students dropped out at alarming rates. I have benefited greatly from excellent public education, and budget cuts have put that education in jeopardy.

And I spent my primary education believing that if I worked hard enough, I could graduate and get an affordable, world-class college education in my home state, too. That promise, if it was ever true, certainly seems less and less within my reach every day. Every time tuition is raised, by the Board of Governors at the urging of the legislature, I go more into debt. Policy makers seem like their concerns about student debt revolve around parents and families paying tuition, but that’s not the case – my loans are on me. Asking your parents for help paying for college is a luxury that’s already out of reach for so many North Carolina students.

And I refuse to believe any longer that the increasing cost and declining quality of education in this state is something that these policy makers can’t help. Funding isn’t a just a question of allocating resources efficiently, it’s a question of values. And it’s clear that NC leadership doesn’t value education — not as much as they value tax cuts for the wealthy, or corporate subsidies. The most recent funding increases barely scratch the surface of the damage that’s been done under the guise of fiscal responsibility. Among this state’s politicians and leaders, talk of supporting education is plentiful – but talk is cheap.

And the lip service they pay to the value of education is selective, too. They love fields that will bring more profit to the already wealthy: finance, business and STEM, but not one of the forty-six degree programs that the Board of Governors just decided to cut. They don’t care for us to become critical thinkers, to know our own histories and the histories of our marginalized communities, to grow as people.

Steven Long of the Board of Governors made it clear when he said, regarding these program cuts: “We’re capitalists, and we have to look at what the demand is, and we have to respond to the demand.” They treat our education like it’s a commodity —  but they still expect us to pay more for less! As an Economics major, as a student, as an organizer and as a North Carolinian, I can tell you plainly — this doesn’t make sense, and this can’t last.

Raleigh keeps North Carolinians in a college crunch

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May 21, 2015
In 2015 Fiscal Year State Budget, NC Budget and Tax Center, Raising the Bar 2015

Raising the Bar in North CarolinaThis post was written by Michael C. Behrent, associate professor of history, Appalachian State University and is part of the Raise the Bar series featuring expert views on the North Carolina budget debate.

Is our state government doing all that it can to offer North Carolinians the affordable, high quality education they need to secure twenty-first century jobs? Based on data in a recent report from the Center on Budget and Policy Priorities, the answer is clearly “no.”

Affordable public education in North Carolina is a right. Our state constitution states that the legislature must ensure that “the benefits of The University of North Carolina and other public institutions of higher education, as far as practicable, be extended to the people of the State free of expense.” Yet today, free public education is little more than a distant memory. To make matters worse, our citizens find themselves in a college crunch: they are being asked to pay more and more for public universities that are providing less and less.

According to the report, since 2008, tuition at North Carolina’s public universities has grown by 35.8% (or $1,759). The main reason? The 2008 recession, which cut the flow of tax dollars into state coffers at the very moment when many people were choosing college over a grim job market. As state funds dried up, most public universities turned to tuition hikes as an easy fix.

Yet the recession doesn’t bear all the blame: many state legislatures, including North Carolina’s, took advantage of the budget crisis to push questionable ideological agendas. Specifically, they rejected a balanced approach that would combine spending cuts with tax increases, preferring to slash budgets. Universities thus had little choice but to ask students to pay the balance. Read more

Mom explains to kids why she’s proud to pay on tax day

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April 16, 2015
In Commentary, NC Budget and Tax Center, Raising the Bar 2015

Raising the Bar in North CarolinaEditor’s note: The following post by Beth Messersmith, NC Campaign Director with MomsRising.org, is the latest installment in “Raising the Bar,” a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.

This week found my husband and I scrambling to make sure we had all of our I’s dotted and our T’s crossed as we hurried to make sure we had our taxes filed on time.

As he sat watching us from the couch, my almost ten-year old remarked about what a bummer it is to have to pay taxes. His sister stopped doing cartwheels across the living room long enough to agree and opine that she was glad that she didn’t have to pay them out of her allowance.

I guess I shouldn’t have been surprised. Anti-tax rhetoric is everywhere in the weeks leading up to tax day. Just that morning on the way to school the deejay on the morning radio show was talking about how much he hates paying taxes.

But their remarks were enough to make me stop my hunt for receipts and pull the kids onto the couch to talk to them about why —as a parent and a part of this country —I don’t mind paying taxes. In fact, I see it as part of my duty as someone who loves this country and benefits every single day from the investments we make as a society. And why, as a parent, I feel especially grateful for the investments we make in our children.

We started off by talking about their schools and the things that make schools work. They listed off their teachers, their supplies, the buses, even the buildings. Then I asked them who they thought owns our schools and employs our teachers. They’d never really thought about it. Explaining it to them gave me a chance to talk about how taxes are actually investments in our community and, in the case of schools, in the futures of the children who attend them. I shared how I benefited from public schools even before they were born as a student myself, as an employer looking to hire qualified people, and as a community member who benefits from an educated society. Read more

Early childhood budget trends in North Carolina

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April 15, 2015
In Raising the Bar 2015

Raising the Bar in North CarolinaEditor’s note: The following post by Tracy Zimmerman at the North Carolina Early Childhood Foundations, is the latest installment in “Raising the Bar,” a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved. This piece is reprinted with permission from the NC Early Childhood Foundation. The full list of footnotes for this piece can be found on their website.

It’s budget time for the state – a good opportunity to review North Carolina’s history of early childhood investments.

Investing in strategies that focus on children from birth to age eight is the most effective and cost-efficient means to improve third grade outcomes and long-term success for children and the state. For optimal development and a strong foundation, children need good health, strong families and high quality early learning and school experiences. With quality early child development experiences, children are school ready, graduate from high school and grow into productive citizens and valuable employees.

In North Carolina, the Child Care Subsidy Program, Smart Start and NC Pre-K (formerly More at Four) comprise the majority of North Carolina’s state investments in early care and learning prior to kindergarten. Together, they form the infrastructure to deliver evidence-based programs in all 100 North Carolina counties, ensure that children living in low-income working families have access to high quality child care programs and provide at-risk four-year-olds with the opportunity to start school on an even playing field with their higher income peers.

These initiatives are funded through a combination of state general funds, state lottery funds and federal funds. Over the past several years – under both Democrats and Republicans – the state’s approach to funding these initiatives has undergone significant change. Three trends have emerged: Read more

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