New Tax Act Could Save North Carolina Billions
Limiting State Tax Revenues Could Promote Economic Growth: NCPA
February 26, 2016
Dallas, TX (2/26/2016)
North Carolina’s proposed Taxpayer Protection Act could save taxpayers billions – and help grow the state’s economy, according to a new report from the National Center for Policy Analysis’ Tax Analysis Center and the Beacon Hill Institute.
The state recently cut its income tax from 5.75 percent to 5.499 percent, while expanding its state sales tax. State Senate Bill 607, also known as the Taxpayer Protection Act, would reduce the income tax again, from 5.499 percent to 5 percent in 2019 and limit government spending to annual inflation and the population growth rate.
Analysis of the proposed act found:
- The Taxpayer Protection Act, S.B. 607 would save North Carolina’s taxpayers $4.7 billion over 8 years.
- Furthermore, the two income tax cuts included in the Act combined would create 6,500 jobs and increase disposable income by $1.835 billion by calendar year 2025.
- While the tax cuts would reduce state income tax revenue collection more than $1 billion, local governments would see their tax revenues increase by $17 million.
“Tax and expenditures limitations, such as the one North Carolinians could consider on the ballot next fall, are mechanisms to change the course of state government. Time and time again state governments grow in response to crises but never retrench once those crises recede,” says NCPA Senior Fellow and Director of the Beacon Hill Institute David Tuerck. “By placing limits on revenue and specifying a reasonable tax base, TELs are a rules-based tool to restrain excess spending and thus limit deadweight losses of taxation to the economy.”
The Fiscal and Economic Effects on North Carolina of the Taxpayer Protection Act (Senate Bill 607): http://www.ncpa.org/pub/the-fiscal-and-economic-effects-on-north-carolina-of-the-taxpayer-protection-act-senate-bill-607