“Compromise” Tax Plan Bad for North Carolina

Contact: Ben Ray

(919) 559-3811

BenRay@ncdp.org

** For Immediate Release **

RALEIGH-- Reacting to a collapse in public support, Senator Phil Berger has introduced a “compromise” plan that hurts North Carolina in the name of cutting taxes on the wealthy.  The plan, which costs a whopping $4 billion over the next five years, seizes revenue from local governments and dramatically hikes taxes on home energy bills by $1.4 billion.  In spite of these measures, the plan is not paid for beyond the 2015 Fiscal Year, endangering investments in public education, roads, and public safety.

“After a public outcry, Senator Phil Berger has introduced a ‘compromise’ plan that is an easy way out of session for him and Speaker Thom Tillis,” said Ben Ray, a spokesman for the North Carolina Democratic Party.  “Unfortunately, the easy way out for Tillis and Berger is a dangerous path for North Carolina’s hardworking families.  The plan raises taxes on home energy bills by $1.4 billion but offers tax cuts for the rich so large that it leaves a multi-billion dollar hole in the budget, putting investments in the middle class like public education, roads, and public safety at risk.  North Carolina deserves a serious plan, focused on creating jobs and building the economy, not on giveaways to the rich.”

Background

THE NEW SENATE TAX PLAN WOULD COST MORE THAN $4 BILLION OVER FIVE YEARS, RISKING INVESTMENTS IN THE MIDDLE CLASS

The New Senate Tax Plan Would Cost $4.3 Billion Over Five Years. The Senate tax plan would cost $173.8 million in FY 13-14, $510.2 million in FY 14-15, $1.033 billion in FY 15-16, $1.324 billion in FY 16-17, and $1.328 billion in FY 17-18. [HB 998, Senate Finance Committee Substitute, Fiscal Impact, 6/11/13]

N.C. Budget And Tax Center: The New Senate Tax Plan Will Cost $4 Billion Over Five Years, “Putting At Risk Our State’s Foundation Of Economic Growth – Our Public Schools, Universities, Infrastructure, And Safe Communities – All In Order To Pay For Tax Cuts That Will Benefit The Wealthiest.” Statement on Senate Tax Plan from Alexandra Forter Sirota, Budget & Tax Center Director: “The Senate leadership has taken a bad plan from the House and made it worse. Failing to heed the advice of economists, Senate leaders created a tax plan that will reduce available revenue by more than $4 billion over five years when fully implemented, putting at risk our state’s foundation of economic growth – our public schools, universities, infrastructure, and safe communities – all in order to pay for tax cuts that will benefit the wealthiest taxpayers and profitable corporations.” [North Carolina Budget & Tax Center, 6/11/13]

THE NEW SENATE TAX PLAN WOULD HIKE ENERGY TAXES BY $1.4 BILLION OVER FOUR YEARS, WHILE STRIPPING FUNDING FROM LOCAL GOVERNMENTS

The New Senate Tax Plan Would Hike Taxes On Electricity And Natural Gas By $1.4 Billion Over Four Years, By Repealing Franchise Taxes But Applying Sales Taxes. The Senate tax plan would repeal the excise tax on natural gas, which would cut taxes by $31.5 million in FY 14-15, $32 million in FY 15-16, $32.5 million in FY 16-17, and $32.9 million in FY 17-18. It would repeal the excise tax on electricity, which would cut taxes by $157 million in FY 14-15, $159 million in FY 15-16, $160.6 million in FY 16-17, and $162.2 million in FY 17-18. It would apply the sales tax to natural gas, which would raise taxes by $102.3 million in FY 14-15, $103.9 million in FY 15-16, $105.4 million in FY 16-17, and $107 million in FY 17-18. It would apply the sales tax to electricity, which would raise taxes by $417.1 million in FY 14-15, $427.7 million in FY 15-16, $440.5 million in FY 16-17, and $453.8 million in FY 17-18. The net effect would be a $1.39 billion tax hike on natural gas and electricity over four years. [HB 998, Senate Finance Committee Substitute, Fiscal Impact, 6/11/13]

WRAL’s Mark Binker Said The Senate’s Tax Plan “Does Come Down Pretty Hard” On Electricity And Natural Taxes, And Laura Leslie Noted The Shift From Franchise Taxes To Sales Taxes Would Cut Funding For Localities. Mark Binker said on the new Senate tax plan: “One place it does come down pretty hard though, is it levies sales taxes on utilities. So, things like electricity and natural gas.” Laura Leslie followed up: “But what matters about that, is that right now local and county governments get a share of the franchise tax for those utilities. As we understand it at this point, under the Senate proposal, they would no longer get that. And so, as you can imagine, localities and cities are very concerned about the Senate bill.” [WRAL, @NCCapitol, 6/11/13]

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