by Becki Gray
Former Senior Vice President, John Locke Foundation
At the NCGA Revenue Laws Committee meeting this week, during the discussion on increasing the standard deduction, Rep Mike Hager asked what if there was additional $187.4 Million revenue that could be redirected to further increasing the standard deduction? Fiscal Research staff did not have the numbers then but has provided followup in this email:
I thought that Rep. Hager was interested in how much more the deduction could be increased if we appropriated $187.4 million less. In the meeting I presented the impact of raising the standard deduction by $1,000 for a tax return (and $2,000 if married and filing jointly). . The total fiscal impact would be estimated as a reduction in the General Fund of $195-$205 million.
I have run the numbers on the scenario where you would appropriate $187.4 M less and you could raise the standard deduction an additional $1,200 for a tax return (and $2,400 if married and filing jointly). That would make the total increase respectively $2,200 and ,$4,400. The total fiscal impact would be estimated at $380 – $390 million.
If you go the other direction and reduce the fiscal impact of the standard deduction by approximately $187.4 (appropriate more), then a preliminary estimate indicates you would be able to raise the deduction respectively by $70 and $140. The total fiscal impact would be estimated at $10 – $15 million.
Where did Rep Hager get the $187.4 Million figure? That’s the latest estimate that the solar safe harbor costs NC taxpayers this year. It’s all about choices and priorities.