Tax Law That Failed in Colorado Comes to NC

Student-concerned

Student-concernedNorth Carolina legislators are considering a series of constitutional amendments that would cap the state’s income tax at 5 percent AND limit increases in state spending based on inflation and population growth. The sales pitch says lower taxes will bring new jobs while spending limits will force budget discipline.

Sounds good, right? Keeping government spending in check, letting services and programs grow just as much as needed. But there’s a reason that this kind of amendment, dubbed the “Taxpayer Bill of Rights” or TABOR, has been considered in more than 30 states and implemented in only one.

TABOR is actually a vehicle to systematically starve government into obsolescence. It would create a self-fulfilling prophecy for those seeking to slash government and the services it provides by limiting funding to the point of failure. And its notions have both serious flaws and repercussions.

According to the Center on Budget and Policy Priorities, the measures that TABOR pegs spending to – population and the consumer price index (CPI) – don’t adequately predict the need for government spending. The populations most in need of services – the young and the elderly – often grow at faster rates than the general population.

The N.C. Budget and Tax Center reports that North Carolina’s older adult population is forecast to grow 6.5 times faster than the rest of the population by 2030. In addition, the number of students in the UNC system has grown by 36 percent since 2000, compared to 23 percent growth in the general population.  That equates to serious pressures on health services, Medicaid, and higher education.

In addition, CPI measures changes in the costs of goods that consumers buy, not services like education or health care, making it an imperfect measure for government spending. For example, since 1995, medical costs have risen nearly twice as fast as the CPI.

Colorado – the only state to implement TABOR – hasn’t seen the flush of success that TABOR supporters envision. In fact, the state’s national rankings have nose-dived and the state had to suspend TABOR for 5 years in a desperate attempt to give services a chance to catch up to needs.

From the Center on Budget and Policy Priorities, here’s a rundown of just a few of the changes Colorado saw under TABOR:

  • Colorado fell from 35th to 49th in the nation in K-12 spending as a percentage of personal income.
  • College and university funding as a share of personal income declined from 35th in the nation to 48th.
  • Colorado fell to near the bottom of national rankings in providing children with full, on-time vaccinations.
  • The share of low-income children in the state who lacked health insurance doubled, making Colorado the worst in the nation by this measure.

NC State Treasurer Janet Cowell is paying attention to these details and the lack of flexibility that the state would have in dealing with natural disasters or other emergencies. She wrote legislative leaders earlier this month, warning that the legislation could hurt North Carolina’s triple-A credit ratings. North Carolina is one of just ten states nationwide with the top rating from all three rating agencies.

The N.C. Center for Nonprofits also opposes TABOR, noting, “…it would likely lead to new taxes, fewer private contributions, and increased burdens on charitable nonprofits.” Reduced government services would lead more citizens to turn to nonprofits, but those same organizations would likely see funding cut or taxes increased, leaving many to simply fall through the cracks.

NC Women United has sounded the alarm about the ways TABOR would hurt women and families. “From cuts to vital services many women-headed households depend on, to reductions in the local and state government workforce and their contractors that provide good employment opportunities for many women, the impact of this legislation will be felt acutely by many North Carolina women. And, as always, women’s unpaid labor will be called upon to take up the slack.”

These aren’t the kind of “rights” I need as a taxpayer and definitely not what North Carolina needs. We elect legislators to make the tough decisions for our state’s future and for all our citizens. Setting up false spending limits to force painful cuts is not only dishonest but cowardly.




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