The Daily Tar Heel
Printing news. Raising hell. Since 1893.
Wednesday, April 24, 2024 Newsletters Latest print issue

We keep you informed.

Help us keep going. Donate Today.
The Daily Tar Heel

N.C. Studies Cutting Tax Breaks to Raise Revenue

Tax breaks given to banks and to people purchasing expensive cars and machinery are three areas that might be targeted.

Sen. Howard Lee, D-Orange, co-chairman of the Senate Finance Committee, said these and other tax breaks cost the state a tremendous amount of revenue that could help alleviate the state's budget problems.

He said the Finance Committee will be in charge of determining which tax benefits are needed and which ones can be removed.

Lee said loopholes were originally created to initiate a boom in some market sectors. "(We want to) ensure that we are gaining the benefit we expected when we put loopholes in place."

Lee said the tax benefits involving banks and caps on the sales tax levied on luxury automobiles are two classifications of loopholes that will be investigated.

He estimates $300 million to $400 million could be reaped from eliminating the loopholes.

Former State Treasurer Harlan Boyles said reducing tax preferences will keep the state moving forward economically.

Last week, Boyles, along with former governors Bob Scott and Jim Holshouser, was appointed to a committee by Gov. Mike Easley that will look at closing tax loopholes. The committee is scheduled to report to Easley and the General Assembly by April 15.

Boyles said reducing tax preferences is the General Assembly's best option to deal with the state deficit.

He added that legislators will likely have to consider budget reductions if it is not feasible to decrease tax benefits. Across-the-board tax increases would be a third and dire option, Boyles said.

"It's a matter of priorities," he said.

Boyles said many of the loopholes, which have been in place since 1939 without review, benefit a variety of business sectors and consumer groups, some of which might not need tax breaks as much now.

But Sen. John Garwood, R-Wilkes, a member of the Senate Appropriations Committee, said the interests of the business community should be stressed when deciding how to solve this problem.

"Whatever we do, I want it to be fair to the business people," he said.

Sen. Virginia Foxx, R-Alleghany, who is a member of the Senate Finance Committee, also said one of the largest groups benefiting from the loopholes is the banking community.

She said that although spending and revenue have increased over the years, spending has increased at a greater rate, resulting in the current budget deficit.

"We don't have a problem with revenue; we have a problem with spending," she said.

Foxx suggests decreasing government spending as an alternative to cutting loopholes.

"We've got to slow down spending," she said. "That's a lot easier to do than closing loopholes."

The State & National Editor can be reached at

To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.

Special Print Edition
The Daily Tar Heel's Collaborative Mental Health Edition