Consider This...

December 7, 2006

 

"Where will the money come from?”

That will more than likely be the mantra for many in the 2007 General Assembly, as they draw up a new biennial budget with a billion-dollar shortfall staring them in the face.

As inequalities in education and wealth get worse and worse, the state has more to do than ever before. Trying times require more revenue. The next legislature will have to find that money somewhere.  

This time, let’s hope that they don’t soak the poor again. In recent years revenue increases have come mostly from regressive taxes such as the sales tax and the lottery tax.

The cigarette tax is an offender as well. Commentators statewide rejoiced at the news about the windfall from the cigarette tax that was announced simultaneously with the news that smoking declined in N.C. as well.

But if you look past the smoke on that issue, you’ll see that smoking was declining anyway (although the decline, especially among teenagers, was undoubtedly steepened by the tax increase). And because of that same decline, revenue from that tax will drop significantly next year, leaving an even bigger hole to fill in the budget. It has to—that’s the nature of an excise tax designed to decrease consumption.

North Carolina desperately needs an overhaul to produce a far more progressive revenue system that doesn’t rely so much on its poorest citizens to pay the bill. With the state’s business climate booming despite relatively high corporate income tax rates, it’s time to explore increases in corporate income levies to fund infrastructure development.

The income tax is the  most progressive place to start when raising revenue. You don’t need smoke and mirrors to find enough revenue to invest in North Carolina.