NC Senate OKs massive tax cut package
State senators have approved a measure to cut personal and corporate income taxes and other business taxes by more than $2 billion over the next two years.Posted — Updated
Eight Democrats joined Republicans in the 36-14 vote.
"We have consistently collected more revenue from taxpayers than we need to operate a sound state government," said bill sponsor Sen. Paul Newton, R-Cabarrus. "This bill recognizes that and will allow taxpayers to keep more of their hard-earned money while keeping North Carolina on solid financial ground."
The bill cuts the personal income tax rate from 5.25 percent to 4.99 percent and increases the standard deduction from $10,750 for a single filer to $12,750, starting in the 2022 tax year.
Newton said a married couple filing jointly with two children making $38,000 a year would see their tax burden decrease by 50%, while a family making $200,000 per year would see a decrease of just 7.1%,
"Some 250,000 North Carolinians will be removed from the tax rolls altogether" by increasing the standard deduction, he added.
"If your heart is to help the least affluent among us, this bill will do that," he said.
The bill also eliminates the corporate income tax rate, currently 2.5 percent, over five years, beginning in 2024. It also cuts out some areas of the state franchise tax, which sponsors say discourages capital investment.
The bill also includes a grant program for businesses that have already received Paycheck Protection Program loans or other relief funds during the pandemic. The grants would be for up to 7.5% of the amount those businesses have already received, and the checks would be sent out automatically by the state Department of Revenue.
Sen Wiley Nickel, D-Wake, introduced an amendment that would have left the corporate tax rate in place and used the revenue instead for a grant program for child care, saying 92% of corporate taxes in North Carolina are paid by out-of-state corporations.
"No one is disputing the value of tax cuts to those who need them the most. But out-of-state corporations and the super-wealthy do not," Nickel said. "They have done just fine in this pandemic."
His amendment was voted down on party lines, 28-22.
Democrats who opposed the bill said the cost of the cuts over the next five years will exceed $7 billion, money they said that should be invested in transportation and water infrastructure, crumbling schools and early education.
"These tax cuts for corporations and the wealthy will slam the door on universal pre-K," Nickel said. "There is no chance we could ever do something big and bold like that if we continue to drain money from our coffers."
The bill now goes back to the House, where leaders have already expressed support for much of it. It's likely to end up in the final budget package.
Gov. Roy Cooper, however, has already cautioned lawmakers he doesn't support the corporate tax cuts.
Copyright 2024 by Capitol Broadcasting Company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.