NC Senate pushes flawed caps on taxes and spending

A “taxpayer bill of rights” as foolishly passed by the North Carolina Senate may be seductive public policy, but it is potentially disastrous public policy. Some senators even renamed the idea a taxpayer “protection act,” a little sleight of hand for an easier sell to the House.

Most states have flirted with the TABOR, as it is called, but only Colorado had passed it.

As envisioned, it would put a ceiling of 5 percent on the personal income tax rate, limit government spending to track with population and put public money in an emergency fund that could be accessed only with a two-thirds vote of the legislature.

On the surface, TABOR would be tempting for taxpayers who knee-jerk against any increase. That’s why Senate advocates are confident that if they put a TABOR constitutional amendment to a public vote, it would pass.

But this idea has been a miserable failure in Colorado. What happened? School spending as a percentage of personal income dropped, health insurance coverage for poor children was diminished and, oh, by the way, the state’s credit rating was downgraded.

TABOR limits a state’s ability to cope with emergencies when it can’t raise taxes even temporarily. And the high bar of a two-thirds vote to gain access to a state emergency fund might be tough to clear if a number of lawmakers decided just to stand against it on some right-wing principle.

The credit-rating loss, almost certain to come if North Carolina passes TABOR, will be devastating in terms of the state’s ability to borrow money, and it’s something industry looks at when considering locating in a state. A state that ties its hands in taxes or expenditures of public money often can’t answer infrastructure needs such as highway maintenance or training workers.

N.C. Treasurer Janet Cowell warned lawmakers against this. North Carolina is one of only 10 states with a AAA credit rating from all rating agencies. It would most certainly be gone with TABOR in place.

It’s absolutely astonishing that despite the failure of TABOR in Colorado, stubborn state Senate Republicans have pushed on with it, almost defiantly ignoring common sense and the business community. Why have many other states considered it and then reconsidered it? Because, after that first flush of thinking it’s a great conservative idea and run-on issue, cooler heads realize it hasn’t worked.

This story was originally published August 26, 2015 at 6:15 PM with the headline "NC Senate pushes flawed caps on taxes and spending."