@NCCapitol

@NCCapitol

Senate gives tentative approval to tax cut

Posted July 2, 2013

— The state Senate has given tentative approval to a bill that falls short of the grand overhaul of North Carolina's antiquated tax system but cuts rates for individuals and businesses.

After voting 32-15 Tuesday, Senators will vote a second time on Wednesday before sending the measure back to the House, which has pushed its own version of a tax bill this session.

"I wish we could get more, but I'll take what we can get," Sen. Buck Newton, R-Wilson, said. 

In many respects, the bill passed Tuesday represents compromise with the state House. The proposed 5.75 percent personal income tax rate is a midway point between the House proposal and an earlier Senate draft. The Senate bill also backs off a plan to change how Social Security income is taxed and compromises on how the state would deal with sales taxes. 

But the Senate bill still raises $1.5 billion less than the House plan would over the next five years, a gap that has been a sticking point in negotiations. 

"There's been a good deal of work done on trying to find some common ground," Senate President Pro Tem Phil Berger said. 

Senators made one change to the bill that came out of committee Monday. They expanded a one-year cap on the state's gas tax to two years.

The measure drew condemnation from Democrats, who said it amounted to a tax cut for businesses and high-income earners that will come at the expense of lower-income citizens. 

Money generic, dollars Changes to NC tax code near Senate passage

Analysis by the legislature's nonpartisan fiscal staff showed most taxpayers would pay less under the plan. However, individuals making $20,000 per year would pay slightly more – about $48 per year – under the plan. A couple married filing jointly earning a combined $40,000 would pay about $380 less per year. 

"This bill is not tax reform," said Sen. Josh Stein, D-Wake. "This bill is a tax cut to the wealthy and out-of-state corporations."

Stein blasted the measure as not providing sufficient money for government services.

"Will we ever give the teachers of North Carolina pay raise again?," he said. "They're already 48th (in the nation). Do we want them to be 50th?"

That prompted Sen. Jerry Tillman, R-Randolph, to dismiss Stein as championing "liberal giveaway" programs.

"That money will be spent in the economy," Tillman said of the tax cuts. 

Another focus of attack for Democrats were provisions in the bill that would cap the sales tax refund for nonprofit corporations at $2.85 million per year. That amount of refund would require a nonprofit to spend $40 million per year before they would exceed the cap on sales tax refunds. 

Sen. Dan Blue, D-Wake, said such a rule "penalized success" of big nonprofits such as WakeMed and Rex Healthcare. Only about a dozen health systems and two universities – Duke and Wake Forest – would end up paying some sales tax under the rules.

"The ones that are above that threshold are institutions that are organized as nonprofits but are institutions that pay their (top) employees ... six- and seven-figure salaries," said Berger, R-Rockingham. "Those institutions, we felt, probably could withstand this."

The state House is not in session this week, so it was not immediately clear how top leaders in that chamber would react to the Senate bill.

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  • Mr. Middle of the Road Jul 5, 1:38 p.m.

    The 'stimulus' was designed to stop the bleeding from 6 years of irresponsible tax cuts for the wealthy/inreased spending on the wars. It worked for what it was designed. It will probably take a decade to undo the damages of 2000-2006. Mr. Middle of the Road July 2, 2013 5:54 p.m. >>>BAMM! Swing and a miss, NOPE, most of that money went to the companies that bundled in swap defaults, and Barney Frank and Dodd were both told about fanie and freddie, but they didn't listen. ALL those European banks, and other global banks, got the bulk of that money from the companies that owed them. Should have let them GO UNDER!! But it will take forever to clean up from 2008 to 2016...what a mess!!

    Dnut

    The unemployment rate quit plummeting liek it was under the republicans. The stimulus worked for what it was designed. Get your fingers out of your ears, stop screaming and listen to reality.

  • josephlawrence43 Jul 4, 11:01 a.m.

    Don't know where those 1.6 or 1.8 million jobs are--with unemployment standing well above 7% ( the real unemployment is still hung around 14%). It seems that GCF (Goodwill Community Foundation) in creating 400 jobs did better than the "stimulus".

  • rroadrunner99 Jul 3, 6:26 p.m.

    And Republicans wonder why they haven't held controlling power in the last Century! After this term it'll be another century or longer before they get it again.

  • Sandbar33 Jul 3, 10:39 a.m.

    "One year after the stimulus, several independent macroeconomic firms, including Moody's and IHS Global Insight, estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecast a total impact of 2.5 million jobs saved by the time the stimulus completed."

    It was a huge success in North Carolina as you can tell by the moral monday protest. Nothing like losing a job paying 65k and replacing with a "stimulus created" job paying half that!

    One would think with all the jobs the stimulus created that those enormous food stamp numbers would be coming down rapidly.....right?

  • ncmike Jul 3, 7:15 a.m.

    The working conservative voters didn't THINK that a GOP-controlled State Gov't would raise their taxes by cutting their mortgage deduction so that corporations don't have to pay any taxes. Seniors didn't THINK that they'd tax part of their income to goose the CEO and boardroom's pay and perks, apathetic voters didn't THINK that by not going out to vote that a Republican-controlled State gov't would gouge them with taxes by taxing virtually all services, and right-wing ideologists didn't THINK that when they lost their job that their unemployment safety net would be nearly cut in half. The problem is - they didn't THINK!

  • junkmail5 Jul 2, 11:57 p.m.

    Well we all saw how well those trickle down economics worked in the 2009 stimulus.... nearly a trillion dollars... and where or where are all those jobs? -mep

    I know you hate facts, but what the heck...

    One year after the stimulus, several independent macroeconomic firms, including Moody's and IHS Global Insight, estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecast a total impact of 2.5 million jobs saved by the time the stimulus completed.

    The CBO estimated according to its model 2.1 million jobs saved in the last quarter of 2009, boosting the economy by up to 3.5 percent and lowering the unemployment rate by up to 2.1 percent

    Economist Dan Wilson of the Federal Reserve, who used similar methodology estimates that "ARRA spending created or saved about 2 million jobs in its first year and over 3 million by March 2011."

  • junkmail5 Jul 2, 11:53 p.m.

    Swing and a miss, NOPE, most of that money went to the companies that bundled in swap defaults- Dnut

    Uh, you're confused again... the stimulus that all went to banks was the one Bush did, in 2008.... AKA TARP.

    The one he was talking about was the 2009 one that had nothing at all to do with banks or other lenders who caused the crash in the first place.

    So, maybe the CEO's studied/worked harder, and a mass of population decided not to study, go to college, or trade school, or community college, and do something with there lives?- Dnut

    From 1966 to 2011 the bottom 90% of earners saw a net gain of $59 per year in income adjusted for inflation.

    That's 0.2%

    The top 10% in that period say their income rise by 84%.... well into the 6-figures in GAIN.

    So your premise is... 90% of the ENTIRE working population is stupid and lazy, and THAT is why literally ALL economic gain in the last 45 years went ONLY to the richest 10%?

    Which seems more likely- that, or the rich rig the game?

  • silkesmom Jul 2, 9:22 p.m.

    Why does big business pay 0? What happened to the small businesses? More fodder for late night TV.

  • mep Jul 2, 7:31 p.m.

    Big Republican gamble that citizens are gullible enough to believe in "trickle down" Voodoo economics. I was wage earner back in the 80's and nothing substantial tickled to the middle-class yet.

    jackjones2nc

    Well we all saw how well those trickle down economics worked in the 2009 stimulus.... nearly a trillion dollars... and where or where are all those jobs? The money is gone.... but no jobs.

    Clearly money does not trickle down well through all that govt bureaucracy.... but it sure does fill the back pockets of Dem supporters. We and our children will have fun paying it back... along with $16 trillion more debt.

  • Dnut Jul 2, 7:28 p.m.

    Lets see... how well did the trickle down economics of the so-called "stimulus" work out? Nearly a trillion borrowed dollars.... where are those jobs now?

    The 'stimulus' was designed to stop the bleeding from 6 years of irresponsible tax cuts for the wealthy/inreased spending on the wars. It worked for what it was designed. It will probably take a decade to undo the damages of 2000-2006.

    Mr. Middle of the Road

    July 2, 2013 5:54 p.m.

    >>>BAMM! Swing and a miss, NOPE, most of that money went to the companies that bundled in swap defaults, and Barney Frank and Dodd were both told about fanie and freddie, but they didn't listen. ALL those European banks, and other global banks, got the bulk of that money from the companies that owed them. Should have let them GO UNDER!! But it will take forever to clean up from 2008 to 2016...what a mess!!

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