RALEIGH (June 13, 2018) – Today, the House Finance Committee passed Senate Bill 75, which would permanently freeze income tax rates in North Carolina, locking in the tax cuts that began in 2013 and have left our state unable to invest enough in children, families and communities.
This permanent change to the Constitution isn’t needed and won’t guarantee that taxes for everyday North Carolinians won’t go up. As was stated in committee by proponents of the idea, legislators will be able to raise other taxes in the future, including fees and franchise taxes, and get rid of deductions like the mortgage interest deduction and medical expense deduction, just to name a few. Such a permanent move only serves to lock in low tax rates for higher-income people and profitable corporations. Such a permanent move, as has been seen in other states, will put more pressure on local governments to raise property taxes or sales taxes to meet growing needs in their communities.
This permanent change to the Constitution puts at risk our ability to borrow at low costs at a time when we have major infrastructure needs across the state in transportation and education. Moreover, it leaves future lawmakers with fewer tools at a time when federal funding is uncertain and the future could bring new and unexpected needs.
Our lawmakers should reject Senate Bill 75. We should not be limiting the choices of future lawmakers and future voters to do what is best for our state.
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The Budget & Tax Center, a project of the North Carolina Justice Center, conducts non-partisan analysis of state budget and tax policy and monitors economic conditions in the state. We produce timely and accessible research that contributes to policy discussions and public debate, with the goal of building a broader understanding of the role of policy in supporting economic opportunity for all.