GOP Tax plan nothing but a pretty piggy

Editorial By News and Observer, July 16, 2013.

You can put lipstick on a pig, it’s said, but it’s still just a pig. In ballyhooing a tax “reform” agreement that seems more a desperate attempt to prove they’re not the gang that couldn’t shoot straight, Republican legislative leaders and Gov. Pat McCrory had the full makeup kit out Monday.

McCrory, who has been mired in limbo while House Speaker Thom Tillis and Senate leader Sen. Phil Berger have reached stalemate on one issue after another, was positively breathless in announcing the deal. He praised everyone in the room.

“Our tax reform plan is not just a tax cut here and there but meaningful tax reform, historic tax reform, that will spur economic development, create jobs and put more money into the pockets of hard-working North Carolinians,” McCrory said. “This will allow employers and citizens to have more money to buy things, to invest in our great state and create a more rewarding life.”

But a close look, in fact, even a cursory look at this “reform” shows the plan is mainly tax cuts – cuts that will most benefit the wealthiest taxpayers and the biggest businesses.

What about revenue?

According to a legislative staff analysis, a married couple with a couple of kids and an income of $60,000 would save $84 a year. But a single person making $250,000 would save $4,000.

The state’s three-tiered income-tax system, properly designed to have those most able to pay take a slightly larger share of the burden, would be scrapped in favor of a flat 5.8 percent rate, dropping to 5.75 percent in 2015. Flat tax rates mean the wealthiest earners pay the same as those with lower incomes. It has long been touted as “fair” by Republicans when it is anything but.

And big corporations are getting a nice nod from the governor and GOP legislators. The corporate income tax rate will drop from 6.9 percent to 5 percent by 2015.

So what’s going to happen to revenue? Republicans would like us to believe that tax cuts will create jobs – a theory that didn’t work too well during the Bush administration – which will lead to a booming economy and more money coming in to the state. They’re apparently not worried about the $2.4 billion drop in revenue the cuts would cause over five years.

That’s going to create the potential for dramatic cuts in government services if the rosy scenario to which the governor subscribes doesn’t come to pass.

Cuts, not reform

This is not reform. This is not revising the tax code to plug holes and ensure fairness and create a system whereby there is reliable revenue from one year to the next. This is simply cutting taxes for the people most able to pay them and pandering to the business lobby. The governor also continues to hype the notion that, by cutting taxes, North Carolina will signal it is “open for business” and be more competitive with neighboring states.

But in a host of rankings from a multitude of sources and surveys over the past five to 10 years, North Carolina has consistently ranked highly in its attractiveness to business. What some who recruit new businesses, particularly high-tech businesses from California or New York, do worry about is the diminishing of the state’s long-standing image as a progressive, innovative outpost in the Deep South. Governors such as Jim Hunt (and two other Jims, Republicans Jim Holshouser and Jim Martin) worked hard to build that image.

Since assuming control of the General Assembly, however, Republicans have delivered ideological legislation such as an anti-gay marriage amendment and cuts to unemployment benefits, in the process costing tens of thousands of North Carolinians extended benefits from the federal government that would cost the state nothing. Because of that action, tens of millions of dollars will be lost to the state’s economy, even as tax cuts siphon more revenue.

The governor can call this reform, but that is using the term with reckless abandon. Even the glossiest lipstick can’t make this pact shine.