A recent April 16th editorial in Durham’s Herald-Sun highlighted the potential (actually likely) effects of the 2018 amendment that Republican lawmakers put on the ballot to cap state income tax rates (and corporate tax rates as well).
In what now seems like the distant past of 2018, Republican state lawmakers moved to lock in their tax cuts by offering a constitutional amendment lowering the state’s income tax cap from 10 percent to 7 percent.
Opponents said the lower limit would restrict the legislature’s ability to respond in an economic crisis, but voters, as they are wont to do when offered a promise of limited taxes, approved the lower cap with 57 percent of the vote.
Unmoved by the memory of the Great Recession, the Republican majority put the tax cap amendment before voters. And now an economic crisis even deeper than the Great Recession has come. The unemployment rate could rise to double digits, many small businesses could fail and the state could face a revenue shortfall of $2.5 billion.
And there are major ramifications of this new amendment here in 2020 for public education as it is consistently the biggest line item in the state budget. Within the COVID-19 Recovery Act filed yesterday are provisions for budgetary needs for many of public education programs from K-12 to community colleges to state supported universities.
And part of that 2018 amendment had to do with corporate tax rates. Again from the Herald-Sun.
Now North Carolina has a taxing problem. Before the Republican-led General Assembly “reformed” the tax code, the state had a progressive income tax structure with the top tier at 7.75 percent. Now it has a 5.25 percent flat income tax and a lower ceiling for income taxes. The corporate income tax, which is also capped by the amendment, has been cut from 6.9 percent to 2.5 percent.
Just think of a tourniquet, a device that constricts blood flow to a limb or extremity. Only in times of medical emergency should a tourniquet be used. Maybe for a poisonous snakebite or a bloody wound. Sometimes one is used to allow for blood to be taken for testing and health purposes.
But one does not place a tourniquet on an arm or leg for kicks and giggles. There are consequences because blood is the very life force that carries oxygen and nutrients to the very parts of the body that need them. Cutting off blood flow has deleterious effects. Bones weaken and muscles atrophy.
That’s not good for a growing body.
Now think of a metaphorical tourniquet, one in which a constricting element is placed on a part of society that cuts off resources and funding for those who are most invested.
When that 2018 amendment passed, it put a political tourniquet on the state’s revenue and passed it off as “more money in your pocket.” And just as limited blood flow would cause harm to the skeletal system in a body, this measure may now cause our state’s infrastructure to slowly disintegrate. AND ALLOW FOR LAWMAKERS TO FURTHER PRIVATIZE PUBLIC GOODS AND SERVICES.
Chris Fitzsimon put it very bluntly in his posting for “The Follies” from June 17, 2016 when this type of amendment (then called TABOR) was first put into the political landscape. He stated,
“As the N.C Budget & Tax Center points out, that cap would cut off a vital source of revenue that the state needs and make it virtually impossible for future lawmakers to use the income tax to increase state investments, even in times of emergencies.
It also locks in place the massive tax cuts for the wealthy passed in 2013 that will cost more than $2 billion a year when fully in effect, more than the entire budget of the community college system and early childhood programs combined.
The new lower tax cap could threaten the state’s coveted AAA bond rating and force increases in the state sales tax and could lead local governments to raise property taxes and fees. It’s a terrible idea that threatens funding for public schools, health care, and environmental protections and makes decisions for future members of the General Assembly that will be elected by the voters just like the current members were.”
Imagine what 2018’s version could affect today with the pandemic. That’s scary to think about. The very fabric, the very sinews of society like schools, healthcare, and environmental protections can instantly be jeopardized and it would take years to recover.
Remember that all three of those areas (schools, healthcare, and environment) have already been hazardously affected in the last three years here in North Carolina. Oh, and Medicaid expansion was denied and we as a state are still paying into a system that benefits other states but not ours because of political ideology.
Those three areas alone form a large part of our state’s infrastructure, or rather the skeleton of the state’s body. When these areas are harmed, then the need to help them heal is paramount. When bones and muscles have been damaged in a body, then one does not place a tourniquet on the wounded limb. You make sure that blood is flowing amply into the affected area.
It promotes healing. It promotes health.
That is unless those who want to place the tourniquet on those parts of society want to create a situation where amputation is the only option in the end. And while we could not literally amputate the public school system or the environment, we can do the political equivalent – privatize them. It would allow a few select people to profit over the very institutions that our state is supposed to provide.
You place a tourniquet on those items and you stagnate the growth of a state whose population is growing. And when the bone structure cannot handle the weight of a growing body, then… well you can imagine.