Some New Jersey lawmakers are hailing impending tax changes in North Carolina as "monumental" and something that the Garden State should copy.
North Carolina is indeed taking a huge step with its plan. But it's a step backward -- and New Jersey, with the nation's sixth highest unemployment rate and third lowest credit rating, can't afford to go in that fiscally reckless direction.
North Carolina's bill shifts taxes "from the most well-off to the middle class and poor" and "slashes revenues at a time when state government is already strained for funds" to pay for schools, roads and other needs, according to the Center on Budget and Policy Priorities.
The plan will give an income tax break of $2,434 to a family of four making $250,000 a year, while a similar family making just $20,000 will save only $3 a year, according to North Carolina's own estimates.
But that's only part of the story. The bill also wipes out North Carolina's Earned Income Tax Credit for working families and expands the one tax that hits everyone regardless of ability to pay -- the state sales tax -- to some new services, while raising the tax on electricity and some types of home sales. Because of these moves, the four out of five North Carolina families with annual incomes below $84,000 will see higher -- not lower -- taxes, the non-partisan North Carolina Budget & Tax Center estimates.
The plan will drain North Carolina of crucial revenues -- to the tune of more than $600 million a year. How will North Carolina pay for it? With cuts to public education, increases in college tuition, cuts to affordable housing and other reductions in important investments. Those cuts will fall hardest on North Carolina's middle-class and low-income families, make the state less attractive to businesses looking for skilled workers and hurt the state's economy.
When you looks at the facts, one thing about North Carolina's tax plan becomes clear: It has no place in New Jersey, and enacting similar "reforms" would harm our ability to make the investments and broaden the opportunities that the Garden State needs for long-term prosperity.