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State Senate tax shift shows influence of Norquist

RALEIGH — If Senate President Pro Tem Phil Berger and his colleagues in the Senate get their way, you will pay more for bread and milk at the grocery store, and the cost of a getting a haircut and having the brakes on your car repaired will increase too.
That’s a key part of the Senate GOP tax proposal released this week, to expand the state sales tax base by applying it to food, non-prescription drugs, and dozens of services that are currently not taxed.
The state revenue that Berger’s plan would raise by forcing you to pay more for food and haircuts wouldn’t go to make the tax system less regressive overall or increase teacher pay or provide health care to people who can’t afford it.
In fact, Berger’s tax scheme would mean more budget cuts to schools, human services and environmental protections by reducing state revenues by a billion dollars. That’s roughly the budget of the entire community college system.
The extra you will pay for a loaf of bread or to get your car battery replaced will help pay for a $56,000 tax cut for millionaires. A married couple with three kids earning $40,000 would see a tax increase under the plan of more than $600.
And those amounts are not guesses. They come from the tax calculator on the website created to sell the startlingly regressive Senate tax shift. The site also includes a campaign-style video starring Berger, a possible candidate for the U.S. Senate in 2014, walking and talking in what appears to be a factory or warehouse with animation of tax facts and charts appearing over his shoulder.
The political commercial was released Monday night. Tuesday Berger and his key lieutenants met with reporters to talk about the plan but they didn’t provide many more details, just more rhetoric.
It’s not clear when an actual bill will be filed and judging from the less than enthusiastic reaction from other key state leaders, it may not matter.
Neither Gov. Pat McCrory nor House Speaker Thom Tillis seems thrilled with the plan, both issuing bland statements effectively calling it a first step toward tax reform, though it’s no secret inside the legislative building that they consider it more of a misstep than a serious proposal.
The plan also prompted immediate and widespread criticism from likely and unlikely places. Even the head of Raleigh’s leading conservative think tank believes Berger’s plan is too regressive.
The hard right tea party forces were undeterred and spent the rest of the week selling the proposal with misleading claims, attacking the progressive critics who dared question it and complaining about the tax calculator on the slick website that the Senate created.
The calculator that provided the proof that the plan raises taxes on low and moderate income families to give millionaires a break comes from the conservative Tax Foundation, a group that right-wing organizations cite almost every day in their claims that North Carolina taxes are too high and out of step with the rest of the states in the southeast.
The tea party groups also announced that national anti-government zealot Grover Norquist will be coming to the state next week to support the tax plan. That’s not going to help much.
Norquist has famously said his goal was to reduce government down to the size where he could drown it in the bathtub. Now he’s coming to Raleigh to try to convince lawmakers to make working families pay for a tax cut for millionaires and further slash the public institutions he loathes.

There’s a mean-spirited Norquistian tone running throughout the Senate tax shift plan and the way it was presented.
Berger and his supporters seemed to spend more time orchestrating the unveiling of their grand scheme with the website and the campaign video than they did coming up with the details. And they still haven’t been released.
At one point in the video Berger says “you keep your federal tax deductions for things like home mortgages and child tax credits.” You would think that would go without saying — unless while we weren’t looking someone gave the N.C. General Assembly the ability to change federal law.
Berger was trying to deflect one major objection to his plan, that it eliminates the state deduction for mortgage interest payments. The N.C. Association of Realtors has been running hard-hitting television commercials against ending the deduction.

While there may be a legitimate economics argument for ending or capping the mortgage deduction as part of broad-based tax reform, Berger can’t muster the courage to make it. Instead, he tries to mislead the public by saying the federal mortgage interest deduction will remain.
That’s the perfect microcosm of Berger’s entire plan. It’s billed as the “Tax Fairness Act” but it raises taxes on low-income families to give millionaires a break. It’s billed as a comprehensive reform plan but Berger refuses to release all the details. And it’s supposed to spur economic development but it will mean deep budget cuts to the state’s education system and infrastructure that are important to creating and maintaining jobs.
It’s a hard right ideological sales pitch, not a serious policy proposal. And it is the last we need in North Carolina, no matter how many slick videos and websites they make to convince us otherwise.

Chris Fitzsimon is the executive director of NC Policy Watch.

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