North Carolina’s revenue system funds investments in the public structures—schools, courts, hospitals, colleges, universities, and infrastructure—that are critical to building and preserving a strong middle class and a 21st-century economy. It is important that North Carolina have adequate resources to make these investments—but how that revenue is raised is important, too.
In recent years, North Carolina’s approach to taxation has made our tax code more upside-down, asking more of low- and middle-income taxpayers and less from the wealthy and large corporations. The state also has far fewer dollars to meet the needs of a growing population seeking to adapt to a changing economy and respond to natural disasters.
2017 tax proposals continue to march North Carolina down the path to zero income
The Senate recently announced plans to cut state revenue by $1 billion bringing the grand total of revenue losses since 2013 to $3.2 billion or roughly the equivalent of the state’s annual investment in the Community College system and programming and services in Early Education and Child Development. The plan will continue to benefit the state’s wealthiest taxpayers and largest, profitable corporations.
This proposal comes on the heels of the NC Senate’s effort to lock in their approach into the state Constitution by capping the income tax rate at a low and arbitrary rate. This won’t guarantee that taxes won’t go up. It will protect the tax cuts that have primarily benefited millionaires in North Carolina.
Tax Cuts Won't Grow the Economy
Proponents of tax cuts continue to push a mantra of low-income taxes being a major driver of state economic growth. Research and past experience, however, has proven this approach unlikely to deliver promised economic results. Instead it can be counterproductive. Investing in K-12 education and colleges, infrastructure projects across the state, and more targeted support for main street and neighborhood revitalization initiatives presents a much better economic development strategy that helps drive the state forward. Check out more in our Policy Basic on The Reality of Tax Cuts.