The tax cuts included in the federal stimulus package would cost North Carolina less than state officials initially thought last week.
Barry Boardman, an analyst for the non-partisan Fiscal Research Division at the legislature, outlined for lawmakers Wednesday how the state would lose $585 million over two years if they conform state tax laws to the federal changes, as they typically do. Much of that money is through tax breaks for businesses.
Last week Department of Revenue officials, who were given an extraordinarily quick turnaround time of a few hours, estimated the loss at about $760 million. Boardman said his office, given more time, adjusted for several factors, including that the state and federal government operate on different fiscal year calendars.
Legislators now will have to decide whether to alter state tax laws to mirror the federal changes. They chose not to copy federal tax breaks during the economic downturn in 2002, which complicates tax filing, particularly for businesses.
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Re: Stimulus costs less
The state cannot lose something that it never had in the first place. Anticipated income from taxpayers may end up being more or less than anticipated, but to count it as a loss implies that it was somehow the property of the state from the beginning (that was then cruelly stripped away by mean old tax decreases). Subtle distinction, but one that seems to typify the current government approach to our money.