In a newly released Civitas poll, 66 percent of North Carolinians support a constitutional amendment to cap the state income tax rate at 5.5 percent, compared to only 13 percent who oppose it. Unfortunately, that number was altered to 7 percent after some lawmakers in the House got a case of cold feet. In the end, they couldn’t muster up the political courage to at least match Georgia’s cap at 6 percent. Still, 7 percent is better than the current 10 percent cap and voters will now have the opportunity to affirm that on the November ballot.
As the poll indicates, citizens rightly value protecting their property and earnings from government overreach too. Many of our newer residents to North Carolina have themselves fled high tax regions. Lowering the cap helps to protect residents from future spend-thrift politicians.
In the recent past, many North Carolinians had a state income tax rate of over 8 percent when Mike Easley and Bev Perdue were in the governor’s mansion. Gov. Roy Cooper continually signals that North Carolina is not spending enough tax dollars and submitted a budget $500 million more than the GOP controlled General Assembly.
The state individual income tax rate will dip to 5.25 percent in 2019. The amendment’s most positive aspect is helping to secure lower tax rates going forward. After all, one of the main reasons constitutional government is implemented is to prevent runaway power and protect personal property from plunder.
When it comes to chicanery and corruption in state government, one of the most enthralling books is “The Last Hayride” by John Maginnis. It largely profiles the antics of former Louisiana Governor Edwin Edwards. But it’s a powerful moral tale and reminder too about the importance of limiting state power and its never-ending appetite for more and more revenue and “make work” projects. At the end “Fast Eddie,” just one of Edwards’ many nicknames, spent a lot of time in federal prison.
While many prefer to regale in the illegal shenanigans of Edwards, legal plunder of the state financially crippled Louisiana. “Spending on state construction projects had become so profligate by the fourth and final term of Gov. Edwin Edwards during the early 1990s that the state was spending 15 percent of its general fund revenue on debt,” reads a 2017 article in The Advocate, Louisiana’s largest newspaper.
An April Wall Street Journal op-ed by economists Stephen Moore and Art Laffer predicted that 800,000 will flee New York and California over the next three years because of high taxes. Of course, this has been occurring for some time now, individuals and families fleeing high tax states where spending is out of control because of a lack of discipline by state legislatures and no political courage to tackle issues like bloated pensions. California’s top marginal income tax rate is 13.3 percent, highest in the nation. Now migration patterns are reversing from just a couple of generations ago when many fled the Dust Bowl for opportunities in California.
States that have their fiscal house in order are reaping the benefits, all the more if a state can virtually guarantee lower taxes. Texas continually made national headlines recently, especially under former Gov. Rick Perry, for aggressively recruiting businesses and their workers to leave California for low tax Texas. The “Lone Star State” does not have a state income tax. States with bloated expenditures and debt are not only losing businesses, but shedding many of their most productive citizens.
Taxpayers should continually ask “what is the purpose of government?” One of the reasons we have a national debt in excess of $21 trillion is we no longer understand that question on the federal level. We’ve moved too far away from our foundational document or roadmap, the U.S. Constitution.
North Carolina has worked hard in recent years to be a model of fiscal conservative policy, this amendment signals businesses and residents that those policies are less likely to change.
It’s a great idea to reinforce lower taxes in our state constitution and to remind people that government can – and should – only do so much. While 7 percent was not the ideal number, it’s a step forward instead of a step back. By limiting taxes we place limits on government, powerfully reminding our representatives in North Carolina that their sphere is limited and our power over them is not.
