In the name of safety and at times part political theater, North Carolinians spent over a year following stringent emergency orders because of the coronavirus pandemic. Businesses shuttered, citizens lost their livelihood, millions eschewed social events or celebrations of any kind. Many young people are still hampered by mask mandates in schools. A silver lining amidst all that sacrifice, North Carolina is uniquely positioned coming out of this pandemic to offer state income tax cuts. Lawmakers must make it happen for myriad reasons.
First, Carolina Journal is reporting that North Carolina has a little more than a $6 billion surplus compared to estimates. Senate Leader Phil Berger, R-Rockingham, summed it up succinctly when he noted, “A huge surplus does not mean we’re spending too little. It means we’re taxing too much.”
We sometimes forget that every tax dollar collected by the government comes by way of production and property from the citizenry. Every dollar that is taken is the result of somebody working or producing in the market. Allowing workers to keep more of their own earnings is a moral good. Certainly, the state has no enlightened insight on spending the earnings of those who toil through work.
Predictably, there will be wailing and gnashing of teeth by some Democrats and special interest groups. They will demand more spending for social engineering and their pet programs in the name of equity or an unjust system. Magically, only more government and more spending will have answers for an imperfect society. Despite an expected increase in overall state spending in the forthcoming budget, the predictable players will lash out with their partisan chicanery. Rinse and repeat. We’ve all seen it ad nauseam.
At least when it comes to budgets and tax reliefs, the truth is that legislative Republicans should take a victory lap here in North Carolina. As Locke Foundation President Donald Bryson pointed out in a recent piece at RealClearPolicy, “Some states are having to make difficult decisions about which portions of state government to cut.” Yet, North Carolina is one of the few states uniquely positioned to offer relief to taxpayers while responsibly increasing expenditures.
Wisely, Republicans are offering the higher percentage cuts to middle- and lower-class earners by raising the standard deduction for joint filers, taking about a quarter of a million of the lowest-income earners entirely off the tax rolls.
CJ is reporting, too, that the per-child deduction will be raised by $500. Again, lower-income earners will receive a higher percentage cut in taxes. That’s more take-home pay for struggling families and more opportunities to flourish and save.
North Carolina is lowering taxes at a time when it appears federal taxes will tick up. The federal government is now about $28.5 trillion in debt with no end to the irresponsible spending in sight. Future generations may easily be forced to eke out a meager existence to service the debt and endless deficit spending. We won’t even dive into the inflationary policies our federal government creates potentially devastating middle-class savings and the future retirement plans of millions upon millions of Americans. It’s too depressing.
The contrasts on budget management by both parties in Washington and Republicans in North Carolina couldn’t be more different. As former President Calvin Coolidge rightly noted, a government without “sound public policy is not a protector of liberty, but an instrument of tyranny. It condemns the citizen to servitude.”
During the pandemic, the government found new ways to take from citizens by restricting their way of life. Virtually everyone has a unique story and anecdotes of sacrifice. Demanding more spending from a revenue surplus should ring hollow. The good news is it will for most. While improving on foundation and think tank rankings is worthy recognition for North Carolina, the benefits of tax relief and responsible budgeting in North Carolina are clear to see. There is no substitute for empowering citizens on the path of self-government and responsibility. Let’s just hope that even more can relearn these simple truths.
Ray Nothstine is Carolina Journal opinion editor.