Raleigh-based WRAL News published an article on May 12 highlighting ATR’s criticism of a single provision in the new state budget approved by the North Carolina Senate in April. While WRAL wrote a whole article on that one complaint, what that article didn’t mention is that, despite that gripe, if that Senate budget proposal were to be brought up for a vote in the House as is, ATR would urge legislators to support it.
WRAL’s article on ATR’s letter to North Carolina lawmakers did not inform readers that, despite the one complaint about the sports betting tax hike, the letter also stated that the Senate-approved budget has much for conservatives to like. The Senate-passed budget includes additional income tax rate reduction to 1.99%, along with a repeal of Certificate of Need mandates that inflate the cost of health care.
North Carolina levies a flat personal income tax of 4.25%, which is scheduled to fall to 3.99% next year and then 2.49% in subsequent years if revenue triggers are met. The new budget that passed out of the North Carolina Senate last month, if enacted, would ensure that South Carolina doesn’t end up with a lower income tax rate than North Carolina in the near future.
The South Carolina House of Representatives approved legislation last week that will transition the Palmetto State from a progressive income tax system with a 6.2% top rate to a 1.99% flat tax over the next five years, followed by total income tax elimination over the subsequent five years. The South Carolina Senate will take up that legislation in January.
Between that action in the Carolinas, Montana lawmakers recently enacting the largest income tax cut in their state’s history, Missouri lawmakers phasing out their state capital gains tax last week, and Mississippi lawmakers putting their income tax on the path to elimination by 2030, it’s clear that ongoing era of heightened state tax competition is not waning, but is in fact gaining momentum.
The North Carolina Senate passed their version of the new two-year budget on April 17. North Carolina House Republicans, who are one seat short of a supermajority, will release their budget proposal in the coming days.