Senate gives OK to tax cut plan

The Senate gave final approval Wednesday to a tax cut plan Republican leaders say will benefit nearly every state taxpayer. But Democrats say the money would be better spent on schools and infrastructure needs.

Posted 9:47 p.m. Apr 4, 2017 — Updated 2:19 p.m. Apr 6, 2017

Laura Leslie

RALEIGH, N.C. — The Senate gave final approval Wednesday to a tax cut plan Republican leaders say will benefit nearly every state taxpayer. But Democrats say the money would be better spent on schools and infrastructure needs.

"Under this plan, 99 percent of all individual tax payers will either receive a tax cut or pay no state taxes," said sponsor Sen. Tommy Tucker, R-Union. "An additional 94,000 taxpayers will not have to pay taxes in North Carolina."

Senate Bill 325, which increases the standard deduction and decreases the tax rate for all taxpayers, also makes changes in the child tax deduction that Senate leaders say will benefit middle-class and lower-income taxpayers the most. But the measure also includes cuts in the corporate tax rate and changes to S-corp taxes for businesses up to $1 million.

Ford Porter, a spokesman for Gov. Roy Cooper, quickly criticized the plan.

"Governor Cooper believes tax cuts should be targeted to support middle-class families, not the wealthy and corporations who didn’t even ask for them," Porter said in a statement. "Under the Senate Republican tax plan, millionaires will receive a tax cut 60 times the size of what working families would get. Those are the wrong priorities."

Sen. Ben Clark, D-Hoke, likewise chided Republicans for labeling the bill a "middle-class tax cut" while also including cuts that would benefit wealthy taxpayers and corporations.

"We have reduced the corporate tax rate significantly over the last four years," said Clark, offering an unsuccessful amendment to remove that tax break and change several others. “Now we’re at the point where the corporate tax rate is about half of what the personal tax rate is. We can stop."

Tucker responded that the bill would "target as much of the dollars toward the middle class as we can."

“I believe this is a fair tax cut all the way across the board," he replied. “Yours picks winners and losers. I’m trying to spread the love all the way across the entire tax base."

In a debate that quickly turned into a repeat of past debates over tax cuts versus investments, Sen. Floyd McKissick, D-Durham, reminded Senate leaders of "the long laundry list of needs in our state," from schools to infrastructure, and questioned the wisdom of reducing revenue, even if much of the tax cut goes to rural taxpayers.

"What those people in those counties need are jobs. They need jobs and good schools," McKissick argued. "We need to help build water and sewer. We need to help expand broadband connectivity."

McKissick called the net effect of the cut for the average taxpayer "minuscule," saying it was "enough money to put a tank or two of gas in the car to drive to the city to look for a new job.”

"The poorest counties are getting the lion’s share of that money back in their community," retorted Sen. Jerry Tillman, R-Randolph. "If you think that government can spend it better, I’ve got news for you: we can’t."

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