MEG WIEHE: Capping North Carolina's top income tax rate isn't good for our communities

Earlier this year, teachers across the country staged walkouts or full-on strikes to protest low wages and lack of investment in education. North Carolina public school teachers and their allies participated too, calling for better pay and more overall school spending to improve our children’s education.

Given the state of education funding and the clear public will to invest more, it’s troubling that some lawmakers pushed for a ballot measure that, if passed, would amend the State Constitution to cap North Carolina’s personal income tax rate at 7 percent. The choice we North Carolinians make this November will affect how our state can raise money for education and other vital programs and services in the short- and long-term.

None of us has a crystal ball. We cannot with 100 percent certainty predict what our collective public needs will be one year from now, let alone 5 or 20 years in the future. Adopting a constitutional amendment that caps the top tax rate may appease anti-tax advocates and wealthy donors, but it is not sound policymaking.  In effect, it would pre-emptively impose the will of some people on future generations and hamstring the state’s ability to meet its growing needs over time.

Since 2013, North Carolina lawmakers have prioritized tax cuts for our state’s wealthiest residents and profitable corporations over boosting investments in our people and communities. After four rounds of tax cuts, the state now has $3.5 billion less to invest in education and other programs.

Capping North Carolina’s state income tax at a rate lower than top rates in place prior to 2013 takes away one of the options future lawmakers could use to restore funding and meet the mounting needs of our growing state. An Institute on Taxation and Economic Policy analysis found that the state could raise more than $2 billion a year if it returned to the top rate and bracket, 7.75 percent on taxable income above $100,000, that were in place prior to the recent tax-cutting spree. That amount is is equivalent to what our state needs to restore per student funding to pre-Recession levels and bring teacher pay to the national average.  More than half of that revenue would come from the state’s wealthiest 1 percent of taxpayers with average incomes over $1.3 million.  These highest-income households have financially benefited most from the recent tax cuts, and they stand to benefit most in the future should North Carolinians vote in favor of the constitutional amendment capping the top-income tax rate.

Should the state cap the top tax rate, then when North Carolina inevitably faces budget shortfalls in the future, legislators would either be forced to cut spending or turn to regressive revenue-raising methods such as increasing sales and other consumption taxes. This is not the right policy for North Carolina families.

Already, North Carolina, just like most other states, asks our lower-income families to contribute a greater share of their income in taxes than it does higher-income families. Taxing the poor (in lieu of the rich), who have finite incomes, more is not the best way to raise revenue and it is not representative of our values as North Carolinians.  We should instead focus on raising adequate revenue in a progressive way so that we can bolster the prospects of low- and middle-income residents.  Widespread prosperity and opportunity benefits all of us.

Last May when North Carolina teachers and their allies marched at the state Capitol, they were sending a message to the state’s lawmakers. Insufficient investment in education is a symptom of a larger failure to invest in our communities. At the very least, North Carolinians should have the right to use legislative sessions to have public debates about our priorities.  The income tax cap constitutional amendment would take that right away, tying our hands in the future should we need to raise more revenue to fund our common priorities.