A proposed cap on state corporate and individual income tax rates might wind up being higher than initially planned.
The House voted 73-45 on Wednesday afternoon to get voter approval this fall to put a 7 percent ceiling on the income tax rates. A final House vote is expected Thursday.
Other WRAL Top Stories
The Senate last year passed legislation to cap rates at 5.5 percent, and the measure resurfaced in the House two weeks ago as lawmakers pushed to put as many as six proposed constitutional amendments on the November ballot.
But some House Republicans obviously weren't comfortable with lowering the limit that far from the current 10 percent ceiling in the constitution.
Votes on the bill were delayed Tuesday evening and again Wednesday morning, and the GOP caucus spent hours negotiating behind closed doors before an amended bill with the 7 percent ceiling appeared in the House Finance Committee at about 3 p.m. Wednesday.
The new proposal sped through committee and floor votes in a little over an hour, although some Democrats still warned against the move.
Rep. Pricey Harrison, D-Guilford, said lawmakers might need to raise taxes in the future to deal with a recession or a natural disaster, but a cap on rates would limit that option.
"This is a really bad idea," Harrison said.
Rep. Darren Jackson, D-Wake, went beyond external forces to stoke the ongoing rivalry within the Legislative Building.
House and Senate leaders have been at odds for several years on how best to handle tax reform, with the Senate pushing for expanding sales taxes to more goods and services and the House trying to rein them in.
"We're locking in the Senate's position," Jackson said, noting limits on future income tax increases would entail more sales tax increases. "We're giving in to them, telling them, 'You won.'"
But Rep. Nelson Dollar, R-Wake, said there's plenty of room between current tax rates and the proposed 7 percent cap to meet the state's needs. Also, the state has a healthy "rainy day fund" to help pay for emergencies, he said.
The state's corporate tax rate is 3 percent and is scheduled to drop to 2.5 percent next year. The personal income tax rate is 5.499 percent now and will go to 5.25 percent next year.
"We're in quite good shape," Dollar said. "This cap is quite reasonable."
Whether the Senate considers the 7 percent cap reasonable remains to be seen. Senate President Pro Tem Phil Berger said Wednesday evening that his caucus is "having conversations."
"It's more than I would like to see and more than our members would like to see," Berger, R-Rockingham, said. "We will see what happens."
After the final House vote, the new proposal must win 30 votes in the 50-person Senate to be put on the ballot.