Study: Temporary tax package raises revenue, supports economic recovery
Maintaining high-income, corporate surcharges would help minimize harsh budget cuts
RALEIGH (June 3, 2011) – Continuing high-income and corporate surcharges through North Carolina’s temporary tax package would raise badly needed revenue and support the state’s economic recovery, new research from the Budget and Tax Center finds.
The package, which is set to expire on June 30, includes a 1-cent sales tax increase as well as high-income surcharges on North Carolina’s wealthiest individuals and corporations. These surcharges raised nearly $200 million each year for fiscal years 2009-10 and 2010-11, the study says.
Maintaining the surcharges would provide a critical short-term boost to state revenues and help support investment in the state’s public structures, the study finds. It would also help avoid deep cuts to public education, indigent defense funds, early childhood programs, community health centers, and other vital services that would be necessary to balance the budget.
It is critical that all households and businesses equitably share the responsibility for closing the state revenue shortfall, said Alexandra Forter Sirota, Director of the Budget and Tax Center and author of the report. Research shows that addressing state budget shortfalls through increased revenue from wealthy households has less of an impact on economic growth than a cuts-only approach to the budget or broad-based taxes.
“Maintaining the current revenue levels—including the 1‐cent sales tax and the surcharges on wealthy households and corporations—will minimize the worst of the cuts,” Sirota said. “This short‐term solution will help set the state on a better path forward and provide policymakers with the time and opportunity to modernize the revenue system for the long term.”
For more information, contact: Alexandra Forter Sirota, email@example.com, (919) 861-1468; or (919) 801-0465;; Jeff Shaw, Director of Communications, NC Justice Center, firstname.lastname@example.org, (919) 863-2402 (office) (503) 551.3615 (mobile).