Proposed Tax Amendment Doesn’t Make Cents

By George Reed, Retired Executive Director

Senate Bill 75 is on the move. It would put on this November’s ballot a constitutional amendment setting a maximum income tax rate of 5.5%. Introduced and passed by the Senate in 2017, the House Finance Committee gave it a favorable report on Wednesday. It has now been re-referred to the House Rules Committee, where proposed constitutional amendments are sometimes parked until legislative leaders are ready to bring them up for a vote.

The following action alert is from Alexandra Sirota at the NC Budget and Tax Center:

Senate Bill 75 would change the state constitution to permanently freeze income tax rates in North Carolina, locking in the tax cuts that began in 2013 and left our state unable to invest in children, families and communities at the level needed. Indeed, in order to keep funding vital public services over time, lawmakers will likely raise the sales tax or fees, which will eat into middle class families’ paychecks and financially strand those who are struggling to get by. It will also risk our AAA bond rating, making future borrowing more expensive for our state. Not to mention, there’s a lot of uncertainty when it comes to the federal funding that North Carolina receives, and we can’t predict the future. North Carolina’s population and needs may continue to grow, and the next Hurricane Matthew could happen at any time. That’s why it doesn’t make sense to make a permanent change to our state Constitution that will take an important tool away from lawmakers who may need it in the future. We elect our legislators to make North Carolina a stronger state – not to tie the hands of future lawmakers. Tell your lawmaker not to amend our state constitution and limit North Carolina now and in the future.

The NC Council of Churches supports tax policy that raises sufficient revenue for important state services. For previous information from the Council about a constitutional amendment putting a permanent cap on the state income tax rate, see the following:

• A summary of SB 75 when it was introduced in February 2017.
• An analysis of the impact of a similar bill, SB 817, introduced but not adopted in 2016.
• An analysis of the Taxpayer Protection Act, SB 607, passed by the Senate in 2015 but not voted on in the House. (Note that SB 607 contained issues in addition to the cap on the income tax rate.)

It is important that you take a few moments to call your elected official in the NC House of Representatives. If you do not know who represents you or how to contact them click here. Ask them to vote against tying the hands of our future.