Senators float tax cut idea

Posted March 26, 2015

— A trio of senior state senators rolled out a bill Thursday they said could save state taxpayers $1 billion annually, but it's unclear how this measure fits with the flurry of tax bills making their way through the General Assembly.

Sens. Bob Rucho, R-Mecklenburg, Bill Rabon, R-Brunswick, and Jerry Tillman, R-Randolph, touted Senate Bill 526 as a way to let taxpayers keep more of their own money.

"This is more money in people's pockets," said Rucho, who said the bill amounted to an extension of 2013's state tax reform effort.

But they were less clear about how to pay for cutting $1 billion from a $21 billion state budget.

"That's not the issue," Rucho said of the potential hit to revenue.

Lawmakers, he said, would have the option of replacing it with a change to other taxes – perhaps by widening the state's sales tax base or closing tax loopholes. Also, he argued that the tax cut wouldn't really represent a $1 billion loss because it would spur economic growth, which would lead to more taxes being collected.

However, when the three senators held a hastily called gathering with reporters to discuss the bill, they did not offer any fiscal memos or other material that explained how the bill would work.

The signature piece of the bill exempts a portion of all taxpayers' income – whether they earn $10,000, $100,000 or $1 million per year – from income tax. Those thresholds are:

  • Up to $17,500 of income in 2016 and the first $20,000 of income in 2017 for those married filing jointly
  • Up to $8,750 of income in 2016 and first $10,000 of income in 2017 for single filers

Taxpayers would be able to decide whether to take those exemptions or itemize deductions available for things such as mortgage interest and property taxes.

The bill would also lower the top personal income tax rate, which is also paid by many small businesses, from 7.75 percent to 5.625 percent next year and 5.5 percent in 2017. It would lower corporate income taxes and move to a system of corporate taxation known as single sales factor apportionment, where taxes are based solely on in-state sales. It's unclear how much of the bill's $1 billion in benefits would accrue to businesses and how much would go to individuals.

This is one of several bills related to taxes moving through the General Assembly. At the same time Rucho and the others were discussing their bill, the state House was pushing forward with a measure to reinstate North Carolina's historic preservation tax credit for rehabilitating buildings. Other bills would allow seniors to deduct some of their medical expenses and would shift how sales taxes are distributed in the state.

It's worth noting that when lawmakers rolled out their major tax reform bill in 2013, several different versions were debated in committee before a single plan was settled upon.


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  • Paul Maxwell Mar 27, 2015
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    It's really not difficult to read between the lines of this latest foray into the bizarre realms of conservative math. "Voodoo economics" indeed...

  • Christopher Rose Mar 26, 2015
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    Great. Any other middle class people smell our taxes going up and schools being even more chronically underfunded to pay for this ridiculous unneeded tax cut for wealthy people? What this really is is a tax shift from the upper classes to the lower and middle classes. By cutting state funding to the schools and I can assure you raising the sales tax. The poor get hammered in schools and sales taxes. The middle class get it in the backside because all our deductions go away. I pray to god all the lower and middle class voters remember this when they go to vote.

  • Dolly Butler Mar 26, 2015
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    SO GOES the $ for Teachers' Salaries.
    Wonder if the Rucho Bill was written by ALEC?

  • Buford Justice Mar 26, 2015
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    View quoted thread

    If you think more money needs to be spent on education then write a check each month to the state Dept. of Education. You can start paying extra taxes RIGHT NOW... no need to wait for the government to force you to do it.

  • Buford Justice Mar 26, 2015
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    View quoted thread

    Believe it or not, not everything in the world revolves around class warfare. You really should try getting out of your box and walking around a bit.

  • Joyce Junior Mar 26, 2015
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    We're at the bottom of the nation in education spending and these guys want to cut even more revenue.

  • Mike Jones Mar 26, 2015
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    What a bunch of traitors.

  • Sam Adams Mar 26, 2015
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    I would rather see a reduction in property taxes or at least tax me on what my house is actually worth. I would love to sell my house for what the City of Raleigh claims its worth. I have appealed 4 times and each time they say they like their number better. Of course they do! I am paying tax on a house that is supposedly 65K more than whats its actually worth.

    Personally, I would like to see them get rid of all these taxes, end all the loopholes and implement a flat tax that is fair to everyone.

  • Roy Hinkley Mar 26, 2015
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    Just how much additional economic activity do they think they will see?

    I suspect we'd need to see more than a 10% increase in the GSP to offset that $1B reduction in taxes. It's that, or a cut in services.

  • Phil Larson Mar 26, 2015
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    "That's not the issue," Rucho said of the potential hit to revenue. Lawmakers, he said, would have the option of replacing it with a change to other taxes – perhaps by widening the state's sales tax base or closing tax loopholes.

    You know this is code for pushing the tax burden onto the poor and middle class to help their wealthy donors become wealthier. Close loop holes for citizens maybe, but you can bet your bottom dollar it won't be corporate loopholes.