While their counterparts in the N.C. House last week were sensibly working to restore the historic preservation tax credit program, Republican leaders in the N.C. Senate unveiled a dubious plan to cut personal and corporate income taxes by $1 billion.
The announcement came a little more than a month after the legislature’s Fiscal Research division and the Office of State Budget and Management reported that the state is facing a $271 million budget shortfall for the current fiscal year.
That shortfall is largely a product of the legislature’s tax cuts of 2013, which were supposed to spur economic activity that would in turn lead to the state collecting at least the same amount of revenue as it would have under the higher, previous tax rates.
Unfortunately, that didn’t work.
But Senate Republicans seek to double down on that proposition by cutting the personal income tax rate to 5.625 percent in 2016 and 5.5 percent in 2017 and the corporate tax rate to 4.5 percent in 2016 and 4 percent in 2017. The corporate tax cuts would kick in whether or not revenues hit the levels required by the 2013 tax law to lower corporate rates.
The budget plan Gov. Pat McCrory submitted earlier this year included no new round of tax cuts. And House leaders have seemed cool to the Senate’s ambitious tax-cutting scheme but have so far had little to say about it.
As the state continues to grapple with revenue shortfalls and funding for schools, universities and the court system continues to be squeezed, this is no time for lawmakers to gamble on an already uncertain and unreliable revenue stream.
