Tax would remedy deficit

Facing an estimated revenue shortfall of $1 billion over the next two fiscal years, the state of North Carolina has a budgetary crisis. Both the Democrats, who control the legislature and the governor's office, and their Republican opposition have put forward plans for dealing with the deficit. However, only the Democratic plan provides immediate help while protecting key state services.

The Democrats have called for a temporary sales tax increase of one penny as well as a quarter percent increase in income taxes for those with incomes greater than $200,000. The proposed tax increase would make up for the $1 billion North Carolina budget shortfall while avoiding arbitrary and harmful cuts to such key programs as education.

Certainly, the plan is not perfect. When Gov. Mike Easley called for an increase in taxes, the leadership in the Legislature worked to find a way to increase only taxes on income--in an effort to avoid raising regressive sales taxes. Sales taxes disproportionately affect the state's poorest citizens, as those with less income pay a greater percentage of their taxes on goods, instead of on income or property.

Thankfully, legislators considered this hardship in their debate--the bill that eventually passed the House Appropriations Committee last week also included targeted tax breaks for the poorest North Carolinians, in an effort to minimize the potentially crippling effect of a sales tax increase.

Another positive aspect of the bill is that the increase in taxes on the richest North Carolinians is minimal. As the economy of the state--and the nation--hovers over recessionary waters, encouraging investment among business owners becomes even more critical. The tax hike is only temporary and should not even exist after it expires in several years.

On the other side of the aisle, the state's Republican legislators have suggested cutting the budget of every state department by 3 percent. It may sound like a mild cut, but percentages can be deceiving. An across-the-board cut is an arbitrary, politically expedient solution that fails to consider the larger implications of cutting all state services. Some state departments could afford to trim their spending, but other agencies would be unable to handle the smaller budgets.

For instance, the Department of Education, which has made strides over the past decade would by greatly damaged by an arbitrary 3 percent cut. Also, in the interest of the long-term health of North Carolina's economy, education needs to continue to improve. A state with a lousy education system and poor social services will not continue to attract investment from other states.

Furthermore, the state has already made stern cuts into many state agencies, particularly the closure of some departments of social services, state-run schools for the deaf and the Dorothea Dix Hospital in Raleigh.