TAX DAY HOPE
Today would have been Tax Day in North Carolina if the tax filing deadline had not been extended to July 15. Not sure if it’s biorhythms or what, but it sure feels like something’s missing without rushing to meet that deadline. Of course, what’s probably missing are the articles and commentary that typically surround Tax Day.
No, this year the Chinese virus – COVID-19 – is the topic of the day and the current struggle of talking heads is over which is more harmful to North Carolina – economic collapse or viral scourge. Both are horrible for the businesses, families and individuals across North Carolina who continue to look for signs of hope for the future.
Tax Day is a good time to talk taxes and be reminded that there is a fairly recent North Carolina model for economic recovery. If you remember, after the 2008 recession, North Carolina’s economy was in the ditch. As the state moved into 2010, personal income taxes were high with the top rate at that time at 7.75 percent. The top rate was the highest in the Southeast.
The state’s corporate income tax rate, a huge factor in job creation, was 6.9 percent – highest in the Southeast as well – and there was double digit unemployment. The state legislature – who coming into 2010 was controlled by tax and spend liberals – had refused to get rid of a 1% “temporary” sales tax for several years. That tax was an everyday kick in the teeth – costing taxpayers around a billion dollars a year.
Brian Balfour of the Civitas Institute recently described what happened next in a “then and now” article that tells the record of the conservative reform majority that first emerged in the 2010 NC General Assembly. He lists the positive changes that occurred under this new leadership over the next 10 years compared to the dismal record of the previous tax and spend leadership. What Balfour describes is what gives us hope:
“Now: Today the state features a flat personal income tax rate of 5.25 percent, the lowest in the Southeast among states that levy one, which ranks only 25th highest nationally. Moreover, a larger standard deduction exempts more low-income workers from having any state tax liability at all.
“More than 1.5 million working families in North Carolina owe no income tax on their earnings now that the state’s standard deduction has tripled,” reported House Speaker Tim Moore’s office in April 2019.
“The current corporate income tax rate of 2.5 percent is the lowest among states that impose one. In 2011, then-Gov. Bev Perdue’s (D) plan to make permanent 75 percent of her ‘temporary,’ one-cent sales tax was rebuffed by the legislature, which overrode her budget veto. The statewide sales tax has remained at 4.75 percent since.”
Shift to today’s reality. Because of the COVID-19 intrusion, it appears we’re in for an economic dip. The depth nor degree of devastation are not currently known. We can all probably agree it will be a painful time.
But sitting here on a day when we would otherwise be touting these amazing tax cut accomplishments and envisioning new strategies of fiscal responsibility for the future, we are glad to have in place the same conservative reform majority leadership that got us out of the ditch last time.
That’s one more thing that should give hope. We are confident this reform majority is up to the task of getting our state’s businesses, families and individuals back on track once again with a thoughtful, prudent plan for North Carolina’s future.