July 25, 2014 Leave a comment
Surprise, surprise. After that substantial tax cuts (overwhelmingly benefiting NC”s wealthiest citizens) the super-charged economic growth the Republicans predicted has not materialized (yes, unemployment has improved, just like it has done pretty much everywhere). The result, NC is coming in well-short in projected revenues (hey, I could have projected this). Who will pay the price? Teachers, those wanting a better education for their kids, the elderly and disabled, etc. But hey, richer North Carolinians can now trade in their Lexus for a Mercedes. Hooray! From WRAL:
RALEIGH, N.C. — New figures from legislative analysts confirm the 2013 cut to individual income tax rates is costing the state far more than originally projected.
Last year, Republican leaders authored a plan to cut income taxes from a three-tiered marginal system of 6 percent, 7 percent and 7.75 percent to a flat rate of 5.8 percent for 2014 tax year.
According to a memo Thursday from legislative analyst Brian Slivka and chief economist Barry Boardman, the updated cost of the tax cut is $690 million for the current tax year.
That’s $205 million, or 43 percent, higher than the original projection of $475 million.
The cost for the 2015 tax year is also projected to be $200 million higher than original estimates – $890 million rather than $690 million…
Republican leaders said last summer that lowering taxes would cause the economy to grow, helping more people find work and bringing in more revenue. They expressed confidence that the cost to the state would be actually be lower than initial projections.
But in the memo, Boardman and Slivka explain that North Carolina wages have not grown as quickly as projected last year.
And how’s this for some cogent economic context:
It’s not yet clear what effect, if any, the revision will have on the current budget negotiations.
However, to put the revision in context, the cost of a 7 percent average teacher pay increase, according to the House’s latest offer, is about $265 million.
The cost of a 6 percent average teacher raise, according to an earlier House offer, is about $178 million, while the cost of funding all current teaching assistants for 2015 is about $450 million.
The cost of the Senate’s earlier proposed cuts to the Department of Health and Human Services, including cutting Medicaid eligibility for thousands of blind, disabled, and elderly patients, is about $228 million.
But, gee, who could have predicted this? Oh, I don’t know, maybe anybody who has actually paid any attention to evidence on tax rates and economic policy in recent years. Of course, now the Republicans get want they really want– lower taxes for rich people and the ability to throw up their hands and say there just isn’t enough money for teachers, the poor, elderly, disabled, etc. And this surely can’t be good for higher education, either.