A new study out by the Beacon Hill Institute at Suffolk University finds that if North Carolina were to pass Senate Bill 607 The Taxpayer Protection Act, taxpayers would save nearly $5 billion in the first seven years after its passage alone.
For those who are unfamiliar, Senate Bill 607, would put a constitutional amendment to a vote of the people, and do the following:
- Cap annual General Fund spending to a growth rate equal to a combination of inflation plus population over the last three years
- Aggressively set aside funds into a Rainy Day Fund until that fund reached 12.5% of General Fund receipts
- Lower the personal income tax rate from 5.499 percent to 5 percent in 2020
- Require a two-thirds vote in both chambers to spend in excess of the cap or to tap into the Rainy Day Funds
The study, published by the National Center for Policy Analysis, also finds significant economic benefits resulting from the bill’s passage, including:
- The creation of 6,500 additional jobs by 2025
- The state budget being a billion dollars smaller by 2024 compared to what it is projected to be without a spending cap
- An increase of disposable income climbing to $1.8 billion by 2025
- Local governments actually experiencing an increase in tax revenues as a result of the increased economic activity
Critics will be quick to point to Colorado’s experience with its Taxpayer Bill of Rights, passed in 1992, with outrageous and false claims that the state somehow turned into a vast wasteland of misery as a result of its state spending cap. I debunked these claims in this article.
That said, SB 607 could be improved if it provided some clear directives on what to do with excess revenue collections (for instance, a tax rebate), and there is a minor possibility that such an amendment may threaten the state’s AAA credit rating, although the large mandated rainy day fund could squash such concerns.
The Senate approved SB 607 last August, the House could choose to approve it this session and send it to Gov. McCrory’s desk for approval.