RALEIGH — A noted tax expert calls Gov. Roy Cooper’s proposed middle-class tax break an example of social engineering.
“Instead of discriminating against struggling families with a stay-at-home parent, we should make our current child tax credit more generous,” Cordato said.
Expanding the child tax credit is an investment in human capital and it lets parents choose how they’ll spend the money that is no longer taxed, including on child-care services if that’s what they prefer, Cordato said.
Sen. Jerry Tillman, R-Randolph, said he didn’t have a big problem with Cooper’s proposal. Tillman co-chairs the Senate Finance Committee, which takes up changes in the tax code.
“That’s one of the things on the feel-good side that the governor wanted to do,” Tillman said.
Cooper’s proposal would provide a tax credit equal to 50 percent of a similar federal credit for children younger than 6 and 35 percent of the federal credit for other eligible dependents. The credit would be phased out for taxpayers filing jointly with an adjusted gross income of between $150,000 and $200,000.
Cooper’s budget office estimates a single parent with two children, ages 4 and 8, with $35,000 in earnings and $8,000 in day care expenses would get a tax credit of $375.
In another scenario, the budget office estimated $440 in tax credits for a married couple with two children, ages 4 and 8, with $110,000 in earnings, $10,000 in day care expenses for the younger child, and $2,000 in after-school care expenses for the older child.
The proposal is estimated to lower state revenue by $52.5 million a year.
“This is a tax break that the middle class needs,” Cooper said Wednesday when he unveiled his $23.5 billion general fund budget proposal.
Rep. Nelson Dollar, R-Wake, said the General Assembly shares Cooper’s goal of providing middle-class tax relief. Dollar is senior chairman of the House Appropriations Committee.
Dollar noted that the General Assembly has boosted the standard deduction for taxpayers since the 2013 GOP tax reform package passed in 2013. It also has cut the income-tax rate and moved to a flat tax.
Tillman reminded North Carolinians that Cooper’s proposal has not passed. “That’s his budget,” Tillman said. “You can’t count on anything for sure that the governor’s got in there.”