RALEIGH – Recently tax revenue surpluses have become the norm on Jones Street, with years of collecting millions more from taxpayers than was budgeted for spending. In the early years of these surpluses lawmakers, as they are accustomed, found a way to spend the extra money. Being Republicans, they chose to pay down debts and build up savings reserves, but even that seemed to ignore the simple fact that these ‘revenues’ are actually money that belongs to the citizens from whom it was taken.
Wednesday, though, Republican legislative leaders announced a proposal that finally acknowledges this.
“Tax revenues don’t belong to the government,” Senate President Pro Tem Phil Berger said at a press conference announcing the proposal. “Tax revenues belong to the people who earned the money to begin with, the people we collected it from in the first place. We’re returning their money to them to spend or save as they see fit.”
House Bill 74, the Taxpayer Refund Act, directs the N.C. Department of Revenue to refund $125 for individuals, or $250 for married couples that were NET taxpayers in 2018. The net tax liability qualifier is important, because otherwise such a proposal may operate more as a redistribution program than an honest to goodness refund. Lawmakers estimated the refunds will go out to over 5 million individual taxpayers.
The proposal comes amid a stalemate on the two-year budget. The General Assembly passed the budget months ago, Governor Roy Cooper vetoed it because it did not include Medicaid expansion, and the stand off continues. So what better to do in the mean time than take this giant pile of surplus money from taxpayers and give it back? It’s a proposal that should have been made years ago.
All that being said, it’s still not as good as it should be. While we have a flat rate income tax in North Carolina, the percentage still means some taxpayers pay gobs more raw dollars than others. A refund of $125 when your tax bill was $10,000 doesn’t exactly feel the same as a getting that $125 when you only paid $500.
If the premise here is that this money belongs to the citizens that paid it in, its return should at least make an attempt at being proportional. That obviously complicates the formula for determining refund values and makes execution more difficult, but it would more honestly respect the net taxpayers of the Old North State.
They have the data, so why not make the refund proportional to what an individual’s tax liability is? Probably because a refund commensurate with tax liability doesn’t spread the love to nearly as many voters as the flat $125 refund per net taxpayer.
Additionally, this should not be a one time deal, even if that means coming back to pass another bill in 2020. The Taxpayer Refund Act is a good idea; giving money back to taxpayers who’ve earned it is always a good idea. It’s so good it deserves to happen every year there is a realized revenue surplus. After all, these surplus tax revenues belonged to the people who earned it just as much in 2016 as they do in 2018, and will belong to them just as much in 2020, and 2021, and, well, you get the idea. How about legislation giving back ‘X’ percentage of any and all revenue surpluses in a given fiscal year?
Some are fond of the idiom, “The ‘perfect’ is the enemy of the ‘good’,” but ideals exist to be striven for. Our nation was founded on a certain set of ideals, and striving to live up to them birthed the most prosperous and free nation the world has ever known.
So, net taxpayers will certainly take the good that is the Taxpayer Refund Act (should Cooper actually sign it), but lawmakers should view it more as a starting point in better respecting taxpayers’ property rights.