Raleigh, N.C. — Both the House and the Senate want to cut personal income taxes, but the Senate wants to make cuts over two years, compared with a four-year schedule in the state House budget.
"This is a targeted tax cut for the middle-class," Sen. Bob Rucho, R-Mecklenburg, said Wednesday.
Rucho's bill, Senate Bill 818, would expand the state's personal income tax exemption – what some people call the zero bracket – in two steps over the next two years. For a couple married and filing jointly, they would pay no income tax on the first $16,500 of their income for 2016. In 2017, a married couple would have the first $17,500 of their taxes exempted from their income. Other taxpayers would also have a larger part of their income exempted from taxes.
Prior reductions in taxes, Rucho said, "have driven this economy forward."
The state House has included a similar tax cut in the budget bill it is vetting this week. However, it would phase in the same tax cuts over four years.
House leaders said earlier this week that the House phased in the tax cuts to ensure the state would have enough revenue to pay for things such as teacher pay.
But Rucho said there's no reason to wait, adding that 75,000 taxpayers who file state returns now would end up paying no taxes under the changes.
"This is the next step in tax reform we must take," Rucho said. "There is no reason to delay this four years."
A difference in tax cuts will mean that the House and the Senate will have different amounts of money to spend on other items. Sen. Harry Brown, R-Onslow, called the difference in this case "manageable."
The difference between the two approaches appears to create a roughly $70 million gap, which is not extreme in the context of a $22.23 billion budget.