From an editorial in the (Winston-Salem) Journal on Wednesday:
As legislative leaders try to devise a new tax structure, North Carolina senior citizens are waiting anxiously to see if their Social Security payments will be taxed.
The Republican promise of tax reform has evolved into a massive tax-cut argument between the two chambers. Theres little reform involved, just tax cutting for some and tax increases for others.
The state Senate tax plan, which passed second reading but was then returned to committee, would tax Social Security benefits for many, but not all, North Carolinians.
Under the tentatively approved Senate plan, seniors with income other than Social Security would pay a 5.4 percent tax in 2014 and a 5.25 percent tax in years after that, on their monthly checks. In effect, the Senate has decided to take more than 5 percent of the income of seniors, many of them on fixed incomes, to help pay for their other tax cuts.
This is bad public policy first because it will hurt seniors with low incomes. The Senate says it has made accommodations for those living solely on Social Security, but their plan is illogical. It provides tax-free Social Security to some, while others, who may have less total income, will pay the tax.
It has long been North Carolina policy to make the state attractive to retirees with wealth. (Thats part of the Republican argument to repeal the estate tax.) Retirees are often fixated on retiring to low-tax states and certainly dont want their Social Security taxed. This plan, if it were to become law, would be certain to dissuade retirees of the wisdom of moving here and bringing their wealth with them.
Various news accounts have noted that seniors, who vote in big numbers, are watching carefully. Both the House leadership and Gov. Pat McCrory realize that taxing Social Security is bad politics, but Senate leaders have insisted on their formula.
Lets hope that the House and McCrory prevail in this. Fixed-income seniors dont need the state grabbing more than 5 percent of their Social Security checks.
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