@NCCapitol

@NCCapitol

NC Senate approves faster tax cut

Posted May 24

— State senators voted unanimously Tuesday to approve a plan to increase the state's standard income tax deduction more quickly than House lawmakers recently proposed.

Senate Bill 818 would increase the standard deduction for a married couple filing jointly from $15,500 in tax year 2016 to $16,500 in tax year 2017 and to $17,500 in tax year 2018. A single filer would see an increase of $500 in each year, going from $7,250 in tax year 2016 to $8,250 by tax year 2018.

The House budget included a proposal to increase the standard deduction by the same amount, but it spread the increase over four years rather than two as way to reduce the impact of the cut on upcoming budgets.

Calling the bill the "Middle-class Taxpayers' Relief Act," sponsor Sen. Bob Rucho, R-Mecklenburg, chided House leaders for "dribbling it out" over four years.

"That is the taxpayers' money and should be returned to the taxpayers," he said.

At the state income tax rate of 5.499 percent, the $2,000 increase would save a married couple about $110 for tax year 2018, while an individual filer would save about $55.

Rucho said the cost of the tax cut to available revenue will be $200 million when it's fully implemented, adding that 80 percent of the money will go to filers with annual income under $80,000.

"We should be helping those individuals and help them through some still remaining tough times in a slow economy," he said.

Democratic senators all voted for the bill, but several expressed concerns that the cuts won't help the desperately poor who need it the most.

"Of the $200 million that will be in the tax cut, only 28 percent of it will go to the poorest families – that's families below $35,000," advised Sen. Angela Bryant, D-Nash, arguing that restoring the Earned Income Tax Credit instead would provide 80 percent of the $200 million dollars to those families.

While she supported the tax cuts for the middle-class, Bryant said, "Our poorest families are continuing to struggle and be worse off, and we could with a different policy make a bigger improvement for that poorest group."

Sen. Floyd McKissick, D-Durham, said state lawmakers "could afford to do both."

"I wish we had done so," McKissick said. "I hope and I trust that, when we see additional revenues come into this state, that we’ll not forget those that haven't been able to join that economic recovery."

The measure now moves to the House, but it's likely to be superfluous, since the tax cut plan will almost certainly be included in the Senate's budget proposal. Senate leaders expect to unveil that plan next week.

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