Latest proposal is the wrong tax cut for NC

Republican legislators are transparent in their flirtation with raising the standard deduction for personal income taxes, something that would save, for example, couples making $44,000 the hardly life-changing amount of $115 a year.

Having cut taxes in ways that benefit the wealthy and big business (and raising other taxes that hit the middle class to make up the losses), lawmakers now want to be able to boast they’ve put money in everybody’s pockets. The change would make little difference to average families while making a big difference in revenue for a state already operating under an austerity budget.

The idea being floated would raise that standard deduction by exempting a couple’s first $17,500 in income from taxes, up from $15,500, and would exempt $8,750 for individuals, up from $7,750. The change would mean 70,000 to 75,000 more taxpayers would not be taxpayers because their incomes fall below that standard deduction.

GOP lawmakers tout the plan as a benefit to low- and middle-income taxpayers, groups they’ve shown no interest in, but then, this is election season.

What they don’t tout is that the state will lose an undetermined amount of revenue at a time when the GOP has cut budgets to the bone and provided negligible pay hikes for teachers and state employees.

Gov. Pat McCrory and GOP leaders act as if North Carolina were still in the midst of the Great Recession, instead of taking advantage of better times to do better things for more North Carolinians. Was there a “Carolina Comeback” or not?

The loss of revenue under this latest political gambit is uncertain but is likely to be around $200 million per tax year. Fear not, though. GOP leaders can make up the difference by taxing sales and services as they have before.

This is bad tax policy, and it’s bad government. The N.C. Justice Center rightly notes a better policy would be to restore the Earned Income Tax Credit, put in place in 2007 to help lower- and lower middle-income people with a credit to offset their income taxes. The center believes it kept some people out of poverty, literally, and it gave a relatively modest amount of relief to a targeted group that really needed it. Before Republicans did away with the EITC in 2014, almost a million people had used it.

Another misguided tax cut would not represent much relief to people and doubtless would necessitate finding additional revenues somewhere – likely in taxes that would hurt the very people Republicans say would be helped by a hike in the standard deduction.

This story was originally published February 10, 2016 at 6:18 PM with the headline "Latest proposal is the wrong tax cut for NC."