NC Senate tentatively approves income tax limits, two other proposed constitutional amendments

Posted June 27

This is the N.C. Legislative Building as seen on Feb. 2, 2015 at 6 p.m.

— North Carolina voters would be given the opportunity to cap the state's income tax rate at 5.5 percent under a bill that the Senate tentatively approved Monday.

The tax measure is one of three proposed constitutional amendments in House Bill 3. The other two would reaffirm the right to hunt and fish in the state and limit the government's used of eminent domain powers to take private property.

Eminent domain limits, which would say that state or local governments could take only property it intends to use for roads, schools and the like, have been long sought by conservatives who want to curb efforts to take property from one private owner so it can be used by another business for economic development purposes.

However, it was the tax provision that received all of the attention Monday.

The current state personal income tax is 5.75 percent, and it is scheduled to fall to 5.499 percent in 2017, when the amendment, if approved, would take effect.

"We're on the right path, and this is another step in that direction," Sen. Bob Rucho, R-Mecklenburg, said, pointing to good state economic news that had coincided with the national economic recovery.

Voters, Rucho said, should have say in what kind of taxes they pay.

"We're voting for something that will allow the people to make a decision," he said.

Senators voted 32-17 in favor of the measure, but Sen. Ben Clark, D-Cumberland, objected to giving the measure final approval. That means senators must vote again Tuesday before the measure returns to the state House.

Should the House approve the bill as well, which is far from certain, voters would decide this fall whether to put the three measures in the state constitution.

Although the vote was not exactly along party lines, it was Democrats who raised the primary objections to the bill, which was put forward by the chamber's Republican majority.

"How can we lift ourselves up from an economic recession with one hand firmly tied behind our back?" Sen. Jay Chaudhuri, D-Wake, asked.

Chaudhuri told his fellow senators that the state needs to be able to tap both sales and income taxes. Limiting income taxes, he said, could prompt downgrades from credit-rating agencies.

But backers of the bill pointed out that North Carolina already has a 10 percent income tax cap that has not, as yet, affected the state's credit rating.

"I think it's time to take a new vision for the state of North Carolina, one in which we're not evaluating ourselves based on somebody's else's view of our ability to borrow money," Sen. Ralph Hise, R-Mitchell, said.

Critics of the bill said the Republican majority is foisting its own values onto future legislatures.

"By placing these changes into our constitution, they are not seeking to bring greater democracy to the budget process, but instead to lock in their choices and limit the choices of North Carolinians tomorrow, 10 years and 100 years from now," said Alexandra Sirota, director of the liberal-leaning North Carolina Budget & Tax Center.

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  • vincenzo9198 Jun 27, 5:55 p.m.

    Way to bury the lead about the (current) 10% tax limit, WRAL! I would have phrased the head "NC Senate tentatively approves LOWER (or HALVED) income tax limits, two other proposed constitutional amendments". (Although, I wonder WHY the Senate didn't rule it as a roll-call bill, which would have obviated the need for an objection by AUTOMATICALLY requiring two different votes.)