Lawmakers propose slowdown of income tax reduction: 'More than we can save, the better'
RALEIGH, N.C. (WTVD) -- Republicans are proposing to slow down personal state income tax reduction in the long-awaited budget deal
The legislature has been dropping the rate, and the goal is to get it to 2.99% by 2033, which is years behind the original proposal.
Small businesses say any extra money in people's pockets, especially these days, will help the local economy.
Cuya Cocina just finished a renovation and expansion project at its Glenwood South location.
Staffers are getting ready to open the new, glass-enclosed café. The grand opening is expected to happen next Friday.
Executive Chef Kevin Ruiz says there's a focus on offering budget-friendly options.
"Come grab their coffee, come grab a sandwich and not feel like they're breaking the bank," said Ruiz. "Whether it's at your local coffee shop, restaurant, boutique, whatever. I think that that helps the community as a whole."
Nevie Nelson and her partner opened Moxie Salon in Morrisville just this past Monday.
It's their second location in the Triangle, and they're excited to start serving a new community.
The owners would like to open other spots. Nelson says a key to that would be saving on her personal income tax.
"With the economy, as much money is going out for gas and food and things like that, the more that we can save, the better," said Nelson.
Republican leaders are slowing down the personal income tax reduction and explain that the revenue is needed to fund teacher raises in the budget deal.
"We've continued to reduce that rate and do it in a responsible way that allows us to continue to provide these kinds of raises," said House Speaker Dustin Hall.
Hall assured that the stepdown will still happen.
The nonprofit NC Budget and Tax Center says the loss of this revenue will mean fewer resources for communities at a time when costs are rising.
"We're hobbling forward," said NC Budget and Tax Center Executive Director Alexandra Forter Sirota. "With underfunding of many of the programs and services that communities rely on, our classrooms are underfunded. Childcare providers are closing. Many health care providers are on the brink of closure with new cuts coming forward."
The phase-out of the corporate rate will continue. That's supposed to be eliminated by 2030.
Constitutional amendment proposed
Also on Wednesday, Sens. Lisa Barnes, R-Nash, Michael Lee, R-New Hanover, and Benton Sawrey, R-Johnston, filed to place a constitutional amendment on the November general election ballot that would cap the income tax rate the state can impose.
Senate Bill 1080 would bring down the maximum income tax rate the state can levy from 7% to 3.5%.
In 2018, voters overwhelmingly approved a constitutional amendment reducing the maximum state income tax rate from 10% to 7%.
The constitutional amendment was part of the state budget framework agreement announced by Senate Leader Phil Berger, R-Rockingham, and House Speaker Destin Hall, R-Caldwell, announced Tuesday.
"There is no question that North Carolina has one of the strongest, fastest-growing economies in the country, and that's a direct result of Republican-led fiscal policies," Lee said. "A crucial pillar of that success has been consistently lowering taxes and putting money back into the pockets of hardworking North Carolinians. When it comes to setting the maximum rate, the people of our state deserve to have a say."
