(The Center Square) – Democrats in the upper chamber unanimously voted against allowing voters a chance to lower North Carolina’s tax cap on Tuesday in a measure central to negotiations on the state’s overdue budget.
Lower Taxes for All NC, known also as Senate Bill 1080, had support of all 30 Republicans. Mecklenburg County Democratic Sen. Woodson Bradley had an excused absence and Haseeb Fatmi, commissioner in the Wake County community of Wake Forest, is yet to be sworn in as successor to former Sen. Terence Everitt.
The legislation moved on to the House of Representatives later in the day and next awaits action from the Committee on Rules, Calendar and Operations.
The constitutional cap on personal income tax today is 7%. The state budget was due to be implemented July 1 and negotiations this month led Republicans in the two chambers to an agreement for voters in November via constitutional amendment to decide on lowering it; the bill authored by Sens. Michael Lee, R-New Hanover, Lisa Barnes, R-Nash, and Benton Sawrey, R-Johnston, is the vehicle to that end.
Polling by Americans for Prosperity North Carolina found 73% in favor of halving the income tax cap.
“Republicans spent the last 15 years digging our state out of the fiscal disaster Democrats created,” said Lee. “The Republican-led tax policies are working, and the citizens should have a say in how much they’re taxed.”
In 2018, voters approved a drop from 10% to 7%.
In the budget plan expected to be finalized next month, the personal income tax schedule triggers are being repealed and a new schedule set. For tax years 2027, 2028 and 2029, the rate will be 3.49%. In 2030, 2031, 2032, the rate will be 3.24%. In 2033 and 2034, it will drop to 2.99%.
At that point, triggers will be put back to take the rate to 2.74% and eventually 2.49%.
In 2010, when Republicans took majorities in both chambers of the General Assembly for the first time in 140 years since Reconstruction, North Carolinians were on an individual income tax system with rates of 6%, 7% and 7.75%, with potential for a surtax on higher earners.
Population in the state has grown roughly 17% since, from about 9.5 million to 11.2 million. Businesses have flocked, in part drawn by the declining corporate tax rate that will eventually be zero.
