North Carolina has collected more than $ 6 billion in state taxes compared to the May 2020 economic projections. This emerges from the data just presented to the members of the Joint Full Chairs Appropriations Finance Committee by the non-partisan Fiscal Research Division at the General Assembly and the Office of State Budget and Management and received from the Carolina Journal.
Overall, North Carolina raised $ 7.3 billion more than the state planned to spend for fiscal 2021 ending June 30, with total revenues of $ 29.5 billion.
Part of the override is the result of late tax payments due to COVID. After accounting for these late payments, the overdraft is approximately $ 6.04 billion and individual income tax payments are up 12.5%. The government’s share of sales tax has increased by 14.5%, and corporate and franchise tax payments have increased by more than 35%.
“A huge surplus doesn’t mean we’re spending too little. That means we’re taxing too much, ”Senate Chairman Phil Berger, R-Rockingham, said in a press release emailed Tuesday afternoon.
The revised consensus sales forecast from June 2021 now assumes growth of 8% over the next two years. State economists are now predicting a growth rate of 4.5% for 2021-22 and a further 3.4% for 2022-23. The official publication of the information is pending.
“There is no question that the strength of North Carolina’s economic outlook is evidence that Republican policies are working, and it is no accident that our state is the second most important destination for Americans coming from other states with dire economic prospects flee, “House spokesman Tim Moore, R -Cleveland, said in a statement. “North Carolina’s overall fiscal policy has created the basis for a commitment to conservative taxation, and we will continue to work with the governor and the Senate to keep our state on an upward trend in economic growth.”
As CJ reported, the Republicans of the US House of Representatives and the US Senate have already agreed on spending figures for the next two years. Spend $ 25.7 billion in the first year of the two-year budget cycle and $ 26.7 billion in the second year. That’s a 3.45% increase in spending in the first year and 3.65% in the second year.
While Governor Roy Cooper and the Democratic Legislature argue that the excess proceeds should be used to meet Cooper’s demand for more spending, Republicans will likely focus their efforts on the tax breaks and reforms already promised. As CJ reported, the Senate passed eight Democrat votes on a tax plan that increases the standard deduction from $ 21,500 to $ 25,500 for joint claimants, removing about a quarter of a million low-income North Carolinians entirely from tax lists. It also lowers the flat tax rate for the remaining North Carolina taxpayers from 5.25% to 4.99%.
In addition, the tax package increases the tax withholding by $ 500 per child. Bill sponsors say a family with two children who earns $ 38,000 a year will receive a 50% tax cut under this bill, while a family who makes $ 200,000 will get a 7.1% tax cut . North Carolina households with a median income of $ 54,000 will have their state taxes reduced by 21%. By raising the minimum deduction, the poorest taxpayers will be in the zero tax bracket.
House Republican leaders have said they broadly support the Senate’s tax plan but have not signed all of the details. The new excess revenue figures open up the possibility that the Republican tax break plan could go further and faster than originally planned, potentially accelerating the gradual abolition of corporate tax and bigger cuts in state franchise tax and even bigger cuts in state-owned income tax.
“This offers an opportunity to do two great things; to reduce the overall tax burden on North Carolina taxpayers and provide an alternative to pay for infrastructure needs directly, ”said Donald Bryson, president of the John Locke Foundation. “There is no reason to burden taxpayers with 30 years of debt at an unnecessarily higher tax rate.”
This is a breaking news and will be updated as more information becomes available.