Winners and losers
Published September 17, 2015
Editorial by Greensboro News-Record, September 17, 2015.
When it comes to addressing income inequality, John Hood of the conservative John Locke Foundation wrote in a recent column, “fiscal liberals tend to believe that government should tax and spend more to fund programs of income redistribution and public investment.”
If that’s true, then our Republican state legislature is fiscally liberal. Its proposed budget adds new sales taxes and distributes the revenue to 79 low-wealth counties. Services such as auto repairs and appliance installations will be taxed for the first time, but residents of Guilford, Forsyth, Wake, Mecklenburg and other, more urban counties won’t see the benefit. Their money will flow to smaller counties, where it will pay for schools, infrastructure and economic development.
This is a change from an earlier sales-tax redistribution scheme approved by the Senate that would have taken existing revenue from Guilford and other urban counties. But the effect is similar. Instead of robbing some counties of existing tax money, it robs them of new revenue. Either way, it comes out of the pockets of residents in some counties and goes toward public investments in other counties.
Republicans reject this kind of income redistribution when it applies to individuals. When the beneficiaries are the counties or districts they represent, they’re all for it.
There’s no question that a majority of North Carolina counties are still experiencing economic distress and need help. But many people in Greensboro, High Point and other cities live in poverty, too. They can barely afford car repairs, if they own cars, let alone having to pay a tax on car repairs. If they do have to pay such a tax, the proceeds at least ought to stay in their communities.
The state budget that was unveiled to the public at midnight Tuesday and then passed on a party-line, tentative vote in the Senate that afternoon creates winners and losers. Businesses are winners because the corporate income tax will fall again. Many individuals will be losers because they’ll pay sales-tax increases and higher car registration fees that will outweigh their gains from a slightly lower income tax. Teacher aide positions and driver’s education are saved, and new teachers will get higher starting salaries. Veteran teachers and most other state employees will see only a $750 “bonus.” Community college faculty will receive pay raises, but the UNC system will continue to experience ebbing state support.
The budget ends tax credits for renewable energy development and caps state spending for light-rail projects at such a low level it will likely stall progress in an area that’s important to meet future transportation needs. It increases highway funding. The N.C. Biotechnology Center is spared elimination, as are historic preservation tax credits and some incentives for the film industry. The state’s savings fund is increased. Locally, the downtown Union Square Campus receives $2 million and the furniture market gets a $544,000 boost to $2.4 million — thanks largely to Sen. Trudy Wade.
Overall, however, the budget does too little to invest in education and innovation. Its architects tout its tax cuts, but it really rearranges tax burdens. Corporations and wealthy individuals enjoy the biggest breaks, but ordinary people may end up paying more.
And money will flow from urban counties like Guilford to smaller neighbors, which is hardly conservative policy.
