From an editorial Tuesday in the (Greensboro) News & Record:
State senators introduced their latest tax-cut extravaganza last week by promising “everybody’s going to benefit.”
Maybe the further cuts proposed last week, although with greater personal exemptions, would add up to real breaks – but there’s going to be a catch.
The $1 billion cost to North Carolina could be offset by broadening the sales-tax base, state senators said.
If income-tax cuts leave more money in people’s pockets, Sen Jerry Tillman (R-Randolph) explained, they’ll go out and spend it. “That will create economic movement, and that in itself will recoup, over a short term, the $1 billion that everyone thinks we’re losing.”
If people pay less in income taxes but an equal amount more in sales taxes, are they better off? It depends on how the tax burden is redistributed.
Even the conservative John Locke Foundation thinks the plan is flawed. It worried about depleting state revenues when its “rainy day fund” is already too low.
Senators also proposed further cutting the corporate income-tax rate, an idea that Gov. Pat McCrory said would “break the bank.” These sharp cuts weren’t included in his proposed budget.
A reasonable level of taxation is needed to provide infrastructure that attracts and supports business growth. If lack of revenue itself were the magic formula, North Carolina’s rural counties would be thriving instead of losing population and hope.