State Politics

Income tax cap gets OK from NC Senate, proposal heads to House

Sen. Harry Brown says a proposal income tax cap in the state’s constitution would be popular in the business community.
Sen. Harry Brown says a proposal income tax cap in the state’s constitution would be popular in the business community. cseward@newsobserver.com

The N.C. Senate voted mostly along party lines Tuesday to schedule a constitutional referendum to prevent legislators from raising personal income taxes in the future.

Senate Bill 75 would ban lawmakers from raising the income tax rate higher than 5.5 percent – if voters approve the constitutional amendment in a ballot referendum, which would be held during the November 2018 election.

Currently, the constitution caps income tax rates at 10 percent. Lawmakers have set the personal income tax rate at 5.499 percent – so the amendment would prevent any future tax hikes.

The Senate voted 36-13 Tuesday in favor of the bill, which now goes to the House. Republican Sen. Tamara Barringer of Cary broke ranks with her party and voted no, while Sen. Joel Ford of Charlotte and Sen. Ben Clark of Raeford were the only Democrats who supported the measure.

 

Senate Majority Leader Harry Brown, a Jacksonville Republican, said the tax cap would build on the state’s recent tax cuts. “This just puts a stamp on what we’ve tried to do in the past several years and lets the business community know we’re in it for the long haul,” he said.

Democrats voted against the bill, arguing it would make it difficult for the state to raise revenue in a recession or another emergency. The liberal N.C. Budget and Tax Center criticized the bill.

“The proposal will lock in what is essentially a giveaway to millionaires and likely shift the state’s reliance to the sales tax, while also putting more pressure on local governments to raise property taxes,” center director Alexandra Sirota said in a news release Tuesday. “This has always been a bad idea for North Carolina, and it still is.”

Senate leader Phil Berger issued a news release praising Tuesday’s vote and calling on Gov. Roy Cooper to back the bill. “Since he says he doesn’t want to raise taxes, he should enthusiastically support this proposal,” Berger said. “If not, it will reinforce why this amendment is needed to keep spendthrift politicians from returning to the days of high taxes and multi-billion dollar deficits.”

The Senate approved a similar bill last year that also included proposed constitutional amendments involving hunting rights and eminent domain. It passed the Senate in a 31-18 vote, mostly along party lines, but it never got a hearing in the House.

This year, the conservative advocacy group Americans For Prosperity plans to drum up support for the tax cap amendment. AFP issued a news release last week announcing that its “volunteers and staff will call over 100,000 North Carolinians to urge them to contact their lawmaker, and the organization will announce a media buy to build public awareness and drive support.”

Colin Campbell: 919-829-4698, @RaleighReporter

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