Members of the North Carolina General Assembly: As you work to craft a new budget that provides additional income tax relief, expands school choice, and grows state spending at a reasonable clip, I commend you for advancing major reforms that are geared toward greater liberty and increased choice. In addition to providing a welcome boost in take-home pay for all North Carolinians, the income tax cut proposed for inclusion in the new budget would also increase the job-creating and sustaining capacity of the in-state employers since the majority of small businesses file under the individual income tax system.
I thank you for rejecting the governor’s proposal to raise taxes on large employers found in his executive budget’s halting of the already codified phaseout of the corporate tax. By rejecting the governor’s efforts to raise taxes and instead passing a new budget that further draws down the personal income tax rate, you will provide relief to all households and help employers create new jobs.
Getting the income tax rate down closer to or below 3%will keep North Carolina competitive at a time when even states that don’t have an income tax — like Florida, Tennessee, and Texas — are finding ways to provide further relief to taxpayers. As part of your effort to keep North Carolina’s tax climate competitive, I urge you to reject the misguided advice recently sent to you by the American Conservative Union (ACU).
Cannabis and casinos are complementary to, not in conflict with, a conservative budget
To reject a budget that provides meaningful income tax relief simply because it’s tied to the authorization of medical cannabis or additional casinos, as ACU is urging, would be a mistake that, ironically, would lead to a less conservative outcome. Not only do medical cannabis, authorization of additional in-state casinos, and expansion of video lottery games not conflict with income tax relief, they’re complementary to a conservative budget that seeks to pair pro-growth tax reform with an expansion of commerce.
It is far better to facilitate rate-reducing income tax reform with spending restraint and additional revenue generated by economic growth and expanded commerce, than it is to pay for it with a broader sales tax base or other tax increases. Authorization of additional casinos and expansion of video lottery gaming, along with legalization of medical cannabis, will permit the expansion of commerce in North Carolina in a way that will meaningfully boost tax collections, which helps facilitate additional tax rate reductions in a manner that is far preferable to offsetting tax hikes or base broadening.
ACU’s threat to negatively rate a vote in favor of a budget that significantly cuts the income tax simply because it authorizes expanded commerce will reflect negatively on ACU and its scorecard not on legislators who vote for the budget. Should ACU follow through with the threat made in their recent letter to you, I and the Americans for Tax Reform will work hard to educate the public as to how the ACU and its scorecard are thoroughly discredited.
I thank you for your service and your leadership in advancing conservative reforms. The changes that you have made to North Carolina’s tax and regulatory climates have produced enormous benefits for your constituents, and they’ve also inspired the enactment of rate-reducing tax reform across the nation. I thank you for proposing another round of income tax relief, which will make North Carolina an even more attractive place in which to live, work, raise a family, and invent.
The above was originally sent as a letter to the members of the North Carolina General Assembly.