Tax Reform Costing NC Hundreds of Millions More Than Anticipated
New numbers out today from legislative budget analysts show that the "tax reform" bill passed last year is going to cost the state hundreds of millions of dollars more per year than they originally thought. The bill was already projected to suck nearly $500 million dollars out of state coffers in 2014, but that number is now expected to be $680 million. From WRAL's reporting on the new numbers,
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. Additional tax cuts are set to take effect Jan. 1.
WRAL also highlights how that revenue could be spent, had it not been giving away to billionaires and profitable corporations,
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.
In his State of the State address, Governor McCrory promised that tax reform would be revenue neutral. Now it's clear that was just another broken promise from Pat McCrory.