Republican lawmakers in the North Carolina General Assembly have proposed an amendment to the state Constitution that, if passed through the legislature and then approved by voters in November, would cap the personal income tax rate at 5.5 percent.
Senate Bill 75, which was filed on Valentine’s Day, proposes placing a referendum on the November ballot to cap the state income tax rate at 5.5 percent, nearly half of the current threshold of 10 percent. North Carolina taxpayers currently pay an income tax rate of roughly 5.49 percent, but the GOP-dominated legislature has passed another tax cut to 5.25 percent that will go into effect next year.
The proposed legislation passed through the Senate with a 36-13 vote in March and had since been sitting in the House finance committee. That committee, in which Lincoln County state Rep. Jason Saine serves as one of two senior chairmen, got the ball rolling once again on Wednesday afternoon with a favorable recommendation of the bill.
“I believe in this proposal because, for one, it forces the hand of politicians,” Saine, a Lincolnton Republican, said. “This doesn’t mean that, if something were to happen, we couldn’t come back and ask the voters again to raise the cap, but there are other options for tax revenue such as sales tax and so forth. What this does, however, is show citizens and businesses alike that we’re serious about keeping our costs in check and that you can have certainty that, if you buy a home and want to raise a family here, we’re not going to become like California or New York, who are raising their taxes so high that they’re running their citizens out. From a public policy standpoint, this is very good signal to taxpayers that we’re going to have some fiscal sanity in our state for a long time to come.”
Opponents of the bill have expressed concern that, in times of crisis, the state or its counties will be forced to raise property and sales taxes, placing more of a burden on low-income families. Saine argued that government spending needs to be limited and also mentioned the state’s “rainy day” fund, which has continued to grow to its current mark of $2 billion under Republican leadership.
“I think those criticisms are counterintuitive to what we’d actually accomplish,” Saine said. “Those very same people that they say this will hurt, it actually helps because it keeps government in check and makes sure that it doesn’t grow too big, too fast. This also effectively puts into place a (Taxpayer Bill of Rights) that basically keeps us within the bounds of inflation and population growth because our growth is going to pay for our needs in state government. My view of government’s role is very narrow. We certainly need to provide for teachers, education and Medicaid, which are things we currently do, but this keeps government out of extending into the wrong areas. This is an effective check on that. The other thing is that this also forces us into thinking about making sure that we have a solid ‘rainy day’ fund so that we’re prepared for ebbs and flows in the economy or natural disasters, which we’ve also been doing.”
The bill will have to continue to make its way through the legislature before the proposed constitutional amendment can make its way onto the November ballot. If voters were to approve the change, it would take supermajorities in both chambers and another voter referendum to reverse the law.