Under the Dome

Voters could be asked to lock in lower income tax

North Carolina voters could be asked to consider Nov. 8 whether to lock lower income tax rates in place.

The state Senate Finance Committee on Tuesday will consider legislation allowing voters to decide on a state constitutional amendment setting the maximum corporate and personal income tax rates at 5.5 percent.

The N.C. Constitution currently provides that the “rate of tax on incomes shall not in any case exceed ten percent.” The amendment would replace the 10 percent with 5.5 percent. For the 2016 tax year, the personal income tax rate is 5.75 percent, but it will go down to 5.499 percent for 2017. The corporate rate is 4 percent.

“It doesn't drive the rate down any,” said Sen. Bob Rucho, a Mecklenburg County Republican and a bill sponsor. “All it does is sets the cap on there so we’re in line with what we've been planning on.”

Over the past few years, the General Assembly has lowered the corporate and personal tax rates in exchange for broadening the sales tax base to include more services. “If you're moving to a consumption-based tax and away from income tax, then you don’t need to have a tax higher than what we already have,” Rucho said. “In essence, all we're doing is bringing the Constitution in line with what we’re presently doing.”

But Sen. Floyd McKissick, a Durham Democrat, said it would be “foolish” to put the lower spending threshold in the Constitution. “You never know what our needs will be as time moves forward,” he said.

McKissick also said he believes the Republican majority in the General Assembly would do everything it could to motivate its GOP base during this election year “to make certain that they remain in power.”

“If they feel they can create an incentive (to drive people to the polls), they'll certainly do so,” he said.

Sen. Bill Rabon, a Southport Republican and another sponsor of the bill, said a lower limit would keep legislators from overtaxing on a whim. “Makes us be more fiscally responsible,” he said. “Lets the people have a say on how much money will be taken out.”

Patrick Gannon: 919-836-2801, @Pat_NCInsider