Politics & Government

Group protests proposal to cap state income tax rate

SB 187 challenged at news conference

Pat McCoy, the executive director of Action NC, says why he is against an upcoming proposal to cap the income tax at 5.5 percent.
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Pat McCoy, the executive director of Action NC, says why he is against an upcoming proposal to cap the income tax at 5.5 percent.

A liberal advocacy group on Monday criticized a proposed constitutional amendment that would limit the state’s maximum income tax rate, arguing that it would hurt schools, seniors and other services.

The state legislative proposal, which the N.C. Senate Finance Committee has approved, would cap the income tax rate at 5.5 percent, down from the current 10 percent.

Progress N.C. Action brought four people to speak against the proposal in uptown Charlotte.

“It is a scheme to transfer funding from low- and middle-income people to the higher incomes,” said Luis Rodriguez of Progress NC Action.

Danielle Hilton, who has a daughter who will be entering the third grade in a Charlotte-Mecklenburg school, says that many of the public schools in the area already need more money. Limiting tax revenue, she said, won’t help that.

Barbara McCullers, a senior citizen living in Charlotte, said that she has concerns about the impact it would have on seniors living on fixed incomes by potentially requiring the state to cut benefits and increase other taxes, such as the sales tax.

The bill, sponsored by Republicans Bill Rabon, Bob Rucho and Jerry Tillman, could be on the ballot in November, where it would need to be approved by a majority of voters. It must also be approved by a two-thirds majority in both state legislatures. The plan still needs the approval of the full Senate and the House before hitting the ballot.

“All this does is save taxpayer money,” Tillman said. “It’s going to keep spending at a reasonable level. You won’t get your spending out of hand if you don’t have the money.”

The planned income tax rates would not be affected by this amendment because they are already set to drop in 2017. Corporate income tax rates are currently set at 4 percent and will fall to 3 percent. Personal income tax rates are 5.75 percent and will drop to 5.499 percent.

N.C. Sen. Joyce Waddell, a Democrat from Mecklenburg County who serves on the Finance Committee, said she had concerns about the speed at which this amendment is moving forward.

“We should study every angle of it,” she said.

The state treasurer’s office has also criticized the bill, saying it would impact the state’s AAA bond rating.

Speakers also said that limiting the tax income rates would restrict lawmakers’ ability to respond to potential state emergency needs.

(Raleigh) News & Observer staff writer Colin Campbell contributed.

Tyler Fleming: 704-358-5388, @tyler_fleming96