On Wednesday the North Carolina Senate passed a tax cut bill with a catchy name. This vote was never in doubt. The bill passed the House Tuesday in a party line vote. And the bill's name played a prominent role in that debate.
Juliet Capulet asked us "What's in a name?" When it comes to Senate Bill 325, the answer is everything. Here's the introduction by a Senate Clerk. "Senate Bill 325, Billion Dollar Middle Class Tax Cut."
That will get your attention. But in case you missed it, Republican Senator Tommy Tucker of Union County wanted to make sure it was crystal clear. "You are correct in that title, this is a billion dollar tax cut that primarily targets the middle class."
Tucker is the primary sponsor of the bill.
First, it cuts the personal income tax rate from 5.499 percent to 5.35 percent. Which, Tucker said, "Will make us the lowest in the Southeast."
And it would cut the corporate income tax rate from 3 percent to 2.5 percent by 2019. "This would make North Carolina's rate the lowest in the U.S. among states with a corporate income tax," Tucker told his fellow senators.
Plus, it would increase the amount of mortgage interest which could be deducted to $22,000. It also increases the standard deduction families can take to $20,000, allows unlimited deductions for charitable contributions and medical costs and creates a child care tax credit ranging from $500 to $2,500, depending on household income.
Under this plan, Tucker said, "99 percent of all individual income tax payers in North Carolina will either receive a tax cut or pay zero income tax."
Now here's where the bill's name comes in again. "So when I look at this title, what does it say," wondered Democratic Senator Ben Clark, "it says a billion dollar middle class tax cut. Maybe it should just be called the billion dollar tax cut."
Clark brought up that the increase in charitable and mortgage interest deductions would help the wealthy more than the middle class. And the drop in the corporate tax rate would obviously help companies.
So Clark offered up an amendment which would "maintain a revenue neutral position for families making over $200,000 a year."
Meaning they would not get the cut, but the billion dollar total would still be met by increasing the cuts for those making far less.
Clark's amendment would also leave the corporate tax rate unchanged.
The amendment failed.
Whereas, Clark took issue with the middle class part of the title, his fellow Democratic senator Floyd McKissick took issue with the billion. This bill would come to that number over the next two years. McKissick said it's time to invest, not cut. "There is a long laundry list of needs in our state," he argued, "Laundry list of needs at the county level. Laundry list of needs in our cities and towns and at the state level."
Things like roads and infrastructure projects, schools, economic development for poor rural counties and more. To make his point, McKissick did some math. He took the billion dollars in question and divided it by the number of Senators and Representatives in the General Assembly. "The number we came up with was about $20 million each. $20 million," he stated, "If you went to your county commissioners, if you went to the towns and communities that you live in, if you thought back about the needs that you know exist, are there up to $20 million within your district? I suspect the answer is clearly yes."
Senator Jerry Tillman clearly did not like the hypothetical question. "I came in today thinking I would be disappointed in that Senator McKissick would not give his political speech."
For Tillman, it all boils down to whom do you trust more with the money? The people or the state. "If you think that government can spend it better, I've got news for you. We can't."
There is no word yet on what the North Carolina House thinks about this bill, or its name.