Black Lives Matter.
  • Skip to primary navigation
  • Skip to main content
  • Skip to footer

NC Council of Churches

Strength in Unity, Peace through Justice

  • Voices
  • About
    • Overview
    • Staff
    • Members
    • Covenant Partners
    • Issue Statements
    • Governing Board
  • Programs
    • Ecumenical Immigration Alliance
      • Ideas for Action
      • Sign Our Statement
      • The NC Sanctuary Coalition
      • Immigration Bible Study
      • Contact
    • NC Interfaith Power & Light
      • NCIPL Overview
      • Faith in Action NCIPL
      • NCIPL Articles
      • NCIPL Resources
      • Upcoming Events for NCIPL
      • Contact NCIPL
    • Partners in Health & Wholeness
      • PHW Staff
      • Mini-Grants
      • PHW Collaborative Pledge
      • The Overdose Crisis: The Faith Community Responds
      • PHW Articles
      • FAQs
  • Priorities
    • Racial Justice
    • The Overdose Crisis: The Faith Community Responds
    • Gun Violence Prevention
    • Public Education
    • NC Sanctuary Coalition
    • Farmworkers
    • Legislative Advocacy
    • Christian Unity
    • Peace
    • NC No Torture
  • COVID-19 Resources
  • Events
  • Resources
    • Publications & Reports
    • Raleigh Report
    • Lectionary
    • Sermons
  • Donate
  • Council Store
  • Show Search

Search NC Council of Churches

Hide Search

Tax-Cut Fever Threatens Services

Steve Ford, Volunteer Program Associate · April 22, 2017 · Leave a Comment

Click here to sign up to receive the Raleigh Report in your inbox

How many times do we have to say it? Well, it’s worth repeating – especially in the aftermath of recent income tax filing deadlines, when the subject becomes a sore point for many: None of us should have to pay more in taxes than our fair share in financing the necessary and desirable tasks of government.

But what sounds like a clear-cut standard is of course complicated by a tangle of conflicting opinions and ideologies. What’s “fair,” “necessary” and “desirable”? Depends whom you ask.

From the Council of Churches’ perspective, fairness requires those with greater means to carry a heavier share of the load – i.e., to pay at higher tax rates.

And the revenue generated by a fair and adequate tax system must be sufficient to finance levels of public services that can improve the lives of all citizens, whether urban or rural, rich or poor. Those services that extend opportunities and protections to those saddled with the disadvantages of poverty cannot be shortchanged.

That sets the stage for what has become North Carolina’s annual debate over tax cuts favored by the conservative Republicans who rule the General Assembly.

The debate unfolds as crucial decisions also are being made about the proper scope of state spending. The two sets of issues, taxation and budgets, are inextricably linked.

Tax-cutters have to come to terms with how their policies make it harder to spend — which of course may be their goal. Frankly, it’s a goal that reeks with the self-interest of those fortunate enough not to have to rely on the public sector for good schools, health care, protection from environmental threats – and who don’t want to pay a dime more in taxes to benefit those who hope public programs will boost their chances to thrive as productive members of society.

Already, cuts in individual and corporate income taxes put in place over the last few years have drained some $2 billion from the state’s revenue stream, compared to what would have been raised without the cuts. The biggest winners have been upper-end earners, which from a progressive standpoint adds insult to injury. As does a corresponding shift toward greater reliance on the regressive sales tax. (No doubt you’ve appreciated that extra sales tax charge so your favorite car mechanic could keep your ride up and running.)

The sales tax shift has cushioned overall revenue losses to a degree, as have revenue gains attributable to economic growth amidst recovery from the Great Recession. But there’s simply less money for budget-writers to work with than there otherwise would have been.

So, for example, when legislators mandate reductions in public school class sizes, they decide to pass the costs of extra teachers and classrooms to local school districts and the taxpayers who finance them. Or – and this is now generating a huge and well-justified pushback – districts say they’ll have to drop arts and phys ed programs in order to pay for the additional teachers in regular classes. Why should such a choice ever have to be made?

Catchy title

Now comes Senate Bill 325, dubbed by its Republican sponsors as the “Billion Dollar Middle Class Tax Cut.” Actually, the legislature’s Fiscal Research Division pegs the amount of revenue that would be forgone under the bill as starting at $323.7 million during the fiscal year that begins July 1 and growing to $839.6 million in fiscal 2021-22. But there’s at least a billion bucks in there somewhere, even if not in a single year.

As to the middle-class angle, yes, some mid-range earners would see their income taxes go down a little more. The personal income tax – now levied at a flat rate, not according to brackets that mean higher rates for those with high incomes – would drop from 5.499 percent to 5.35 percent. Obviously, that means a bigger break for millionaires than for people struggling to afford the basic trappings of a middle-class lifestyle.

An increase in the standard deduction, from $17,500 to $20,000 for married couples filing jointly, would help people with modest incomes. But meanwhile, the deduction for mortgage interest and property taxes, which now is capped at a generous $20,000, would be made even juicier by raising the cap to $22,000. That’s a boon to rich folks, plain and simple.

The bill also would continue the Republican legislature’s relentless whittling away at the corporate income tax. According to the appended fiscal note, that tax rate prior to 2014 was 6.9 percent. Now it’s 3 percent.

S.B. 325 would lower the rate first to 2.75 percent, then to 2.5 percent beginning in 2019. Corporate taxes should not be so out of line on the high side as to become an economic drag. But the benefits and services funded through adequate taxes — good universities, for example — are typically just as important in creating a good business climate as are taxes that are kept minimal. De-emphasizing the corporate tax just ends up putting more pressure on taxes paid by individuals, as well as more pressure on the budget. This is a trend going in the wrong direction.

Budget squeeze

It’s true that the legislative staff predicts revenues will run 4.5 percent ahead of expectations for the next two fiscal years. But those expectations were dialed back to reflect previous tax cuts. S.B. 325 would take another bite. And naturally that would make it harder to meet spending demands.

One news report, citing a legislative staff analysis, says that with the additional cuts in place, budget shortfalls will arise beginning in the 2018-19 fiscal year. By 2021-22, the gap between revenues and what would be needed to fund ongoing services at present levels is estimated at $598.9 million, says that report in The News & Observer.

So how would such a gap be closed? With the current batch of legislative chiefs, spending cuts no doubt would be preferred to a corrective tax increase. Gov. Roy Cooper, who opposes S.B. 325 and who’d rather see any extra revenue put toward more meaningful middle-class tax relief as well as investments in education, presumably would have a different view.

The tax-cut bill isn’t the only cloud looming as the state Senate and House prepare to wrestle with the next state budget. The White House of President Trump is signaling a push for major cuts in domestic spending. Whacking federal environmental protection funds, for instance, would send dangerous ripples toward North Carolina, which relies on that money to help finance its own anti-pollution efforts.

Then there’s the massively ill-advised effort to lock a spending cap into the state constitution. The so-called Taxpayers’ Bill of Rights, House Bill 727, would limit any increases in the state budget to the national rate of inflation plus the state’s rate of population growth. Only by two-thirds votes in both legislative chambers could the limit be exceeded. The key problem is that with spending already squeezed to painful levels, long-standing needs, especially in the education arena, likely would continue to fester.

That bill  — which would lead to a referendum on the constitutional change — was introduced only recently, but a similar measure has come close to enactment. S.B. 325 cleared the Senate on April 5 and is undergoing committee review in the House.

This is the time for legislators to put small-government ideology aside and consider the real impact of digging their tax-cut hole even deeper. Yes, the impact on ordinary North Carolinians for whom the affluence enjoyed by so many in our prosperous cities is just a mirage, and who wish their luckier neighbors would take their needs seriously and pay the necessary freight.

Filed Under: Blog, Homepage Featured, Raleigh Report Tagged With: Economic Justice, Environment, Good Government, N.C. General Assembly, Prophetic Voice, Public Education, Religion & Society, State Budget, Taxes

Steve Ford, Volunteer Program Associate

About Steve Ford, Volunteer Program Associate

Much goes on in North Carolina's state capital that's important to the Council of Churches. I'm glad to have a chance to help follow the action, transitioning from my career with The News & Observer of Raleigh, where I retired in 2012 as editorial page editor. I'm originally from Virginia but have lived in Cary so long I remember the Kildaire Farm barn.

Read more of my commentary here.

Reader Interactions

More Like This

Raise the Wage
Raleigh Report – April 29, 2019
Raleigh Report – April 22, 2019

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Anonymous comments or comments that target individuals will not be posted (please include your first and last name). All comments must be on topic and respectful. Comments will not be posted until they have been reviewed by a moderator. Comments do not reflect the positions of the NC Council of Churches.

Footer

Contact

NC Council of Churches
27 Horne St.
Raleigh, NC 27607
(919) 828-6501
info@ncchurches.org

Facebook

Partners in Health and Wholeness

Featured

Tax-Cut Fever Threatens Services

Latest Tweets

ICYMI: Check out our spotlight piece on Olive Branch Ministry, Hickory, to learn more about their faith-based harm reduction work serving the foothills and piedmont of North Carolina. ncchurches.org/2021/…

About 2 days ago

This Earth Month, we're calling on our network to advocate with compassion for a just & sustainable future. To support you in this hard & holy work, @NCIPL complied a toolkit with policy positions, calls to action, & how we engage in faith-based advocacy. ncchurches.org/advoc…

About 2 days ago

Make sure to register for our upcoming Legislative Seminar. Our opening worship service and award ceremony will honor Michael S. Regan, Administrator of the US Environmental Protection Agency, with the Faith Active in Public Life award. ncchurches.ourpowerb… pic.twitter.com/rG7U…

About 3 days ago

Faith Climate Action Week is coming up! This year's theme is Sacred Ground: Cultivating Connections Between our Faith, our Food, and the Climate. Follow the link to find events >> faithclimateactionwe…

About 5 days ago

2021 is the year for drawing districts in each state after the completion of the US Census. Check out the @LWV's blog on encouraging people to speak up about the drawing of fair maps. Read now >> lwv.org/blog/redistr… pic.twitter.com/4KMR…

Last week

Follow @ncchurches

Latest Tweets

Now that all North Carolinians age 16+ are eligible to receive a #COVID19 vaccine, use the @ncdhhs resource hub to find a local provider near you to get your shot! #MySpotMyShotNC #NC covid19.ncdhhs.gov/v… #MindfulTogether

About 2 days ago

Join us next Thurs., April 22 for our Sacred Conversations event on caring for creation. We'll be discussing environmental caretaking, collective action, and our Sustainability Pledge. Register online at ncchurches.ourpowerb… @NCIPL #MindfulTogether #EarthDay pic.twitter.com/GTpI…

About 3 days ago

Read our spotlight piece on Olive Branch Ministry to learn more about their faith-based harm reduction work serving the foothills and piedmont of North Carolina. ncchurches.org/2021/… @olivebranchgals #MindfulTogether pic.twitter.com/xj2U…

About 4 days ago

Our work has led us to recognize the impact our environment has on our health and ability to flourish. Click below to read more about our commitment to being stewards of God’s good Creation through our Sustainability Pledge. ncchurches.org/phw-s… @NCIPL #MindfulTogether

About 5 days ago

Awesome opportunity from our partners at @emergingissues! #MindfulTogether twitter.com/emerging…

About 6 days ago

Follow @healthandfaith

Latest Tweets

RT @faithinplace Next week is #FaithClimateActionWeek! Join @interfaithpower on April 21 @ 1pm CT for “Sacred Ground: A Message of Hope”—a conversation with @kissthegroundoc filmmaker @JoshTickell & Statewide Outreach Dir. Veronica Kyle on @faithinplace amazing CSAs! bit.ly/Sacred-Ground… pic.twitter.com/xxX7…

About 4 hours ago

RT @ecoAmerica Register for the American Climate Leadership Summit today for the opportunity to join 1000+ climate leaders including Nana Firman, Senior Ambassador of @greenfaithworld to help move America along the solutions path faster! Sign up here: acls2021.org #ACLS2021 pic.twitter.com/Rdxc…

About 4 hours ago

RT @ClimateReality It’s time to follow the money and fight for justice. grist.org/race/how-w…

About 4 hours ago

RT @middlechurch “Where one lives should not determine how long one lives, the quality of the air you breathe or the water you drink.” - @AyannaPressley #RevLove21

About 4 hours ago

Watch livestream @PullenChurch 11am EST pullen.org/livestrea… to hear our Director preach on #climatefairshare & “Manna In The Wilderness” usfairshare.org @uscan @interfaithpower @ELCA @ncchurches @Gina_McCarthy @JoeBiden @JohnKerry @mtmalcom @billmckibben #ActOnClimate pic.twitter.com/3bkX…

About 6 hours ago

Follow @ncipl

Latest Tweets

Copyright © 2021 NC Council of Churches · All Rights Reserved · Website by Tomatillo Design · Hosted by WP Engine