November Ballot Questions Decide N.C.’s Future Tax Environment

Thank you for joining us this Saturday morning. 

This November, North Carolinians will have the opportunity to amend their constitution again. They’ll decide on at least two tax-related proposals: a 3.5% cap on the state’s income tax rate, and a requirement for state lawmakers to limit property taxes imposed by local governments.

After 15 years of policy choices that transformed the business climate in North Carolina, we discuss today why this November’s ballot questions might prove to be the most impactful policies yet.

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North Carolina’s governing philosophy for the past 15 years has rested on this premise: The less government involves itself in job and wealth creation, the more jobs and wealth will flock here.

From that premise, the Republican-led General Assembly transformed North Carolina’s business and tax climate. They slashed income tax rates, kept regulatory creep in check, and restrained the state bureaucracy. And it’s been a wild success. 

Naysayers try to downplay this narrative. And sure, there are legitimate examples to suggest things aren’t perfect, the urban-rural divide chief among them. But we do not live in a utopia, and we never will. Pessimists will always have some or another problem to clamp their fists around. 

As for the positives, the facts are undeniable: CNBC ranked North Carolina the best state for business three of the past four years. The Tax Foundation catapulted North Carolina up its competitiveness rankings from 44th to top-15. The state is among the fastest-growing in the country. We could fill the rest of this page with similar metrics.

Even with that history in mind, the tax-related constitutional amendments voters will decide on this November may well be the Republican majority’s most consequential policy choices yet. That’s because they pour concrete around the governing philosophy that got us here, ensuring it will endure for decades to come.

On the spending side, a 3.5% income tax rate cap all but guarantees state government remains limited in the years to come. Income tax collections comprise the majority of state government’s revenue, and there’s only so much state spenders can do if they can’t raise the income tax rate higher than 3.5%. 

Gov. Josh Stein called the rate cap a “cynical shell game,” asserting it would just require sales tax rate increases to raise revenue in the future. But that claim rests on shaky assumptions. First, the state will already have a 3.49% income tax rate next year, and the world isn’t ending. Responsible spending, combined with socking money away for a recession, will allow the state to weather a recession.

Second, former Gov. Roy Cooper regularly predicted fiscal catastrophe each time the legislature cut taxes, just as Stein is doing now. But the state has been cutting taxes for years, and the catastrophe never came. Instead, the state has seen $12.6 billion in budget surpluses over the past decade.

On the tax side, it’s hard to conjure a better way to signal that North Carolina will remain a low-tax destination than to cement a 3.5% rate cap in the state constitution. Low taxes and the promise of a better life have attracted families and companies here for 15 years. That allure will continue for the indefinite future, and should only be aided by changes coming to the state’s property tax rates.

The property tax amendment up for a vote in November was left intentionally vague by lawmakers. It only asks voters to consider whether or not the General Assembly has the ability to “enact general laws limiting the amount by which the levy of taxes on property may increase.” The bill’s sponsors say once they have approval from voters, they’ll start the work of filling out the details of the levy limit. 

At the same time, the legislature enacted a temporary moratorium on property tax increases across the state for 2026, a tactic favored by Senate Leader Phil Berger. Senate Bill 889, which is currently awaiting Gov. Stein’s signature, requires counties that reappraised their property values in January of this year to wait until 2027 to use them.

Finally, much of the media coverage about the tax-related amendments on the ballot this year has ignored what you just read above. Reporters don’t need to endorse the policy rationale, but they’ve barely even mentioned it. 

Instead, news outlets and a couple of media-darling professors purport to have discovered a way to peer inside the hearts and minds of lawmakers. Much of the news coverage “reports” that legislators are advancing these constitutional amendments as some sort of maneuver to boost Republican turnout in November. 

Here’s one example among many, this one from the News & Observer: “Chris Cooper, a political scientist at Western Carolina University, suggested the motivation behind the amendments may be more political. ‘It is probably best understood as an attempt to boost Republican turnout, but also an attempt to brand the Republican Party with popular policies,’ he said.”

The likelier rationale is also the simpler one: These policies are a way to cement the Republican majority’s governing philosophy.

The theorizing and innuendo – about backroom political consultants concocting constitutional amendments because it’s a tough year for Republicans – ignores the fact that the Republican-controlled legislature has put statewide referenda on the ballot in five of the seven election years since 2011. In that way, 2026 is not unique. Indeed, legislators decided just weeks after President Donald Trump’s 2024 victory – hardly a time when Republicans thought themselves beaten down – to add a voter ID constitutional amendment to the 2026 ballot.

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These amendments are the logical next step in a 15-year project that has already turned North Carolina into a national model for business competitiveness and economic growth. Lawmakers are trying to make permanent the philosophy that got us here. 

Voters will decide in November whether to lock in a 3.5% income tax cap and tighter limits on local property taxes. Fifteen years of evidence suggests the governing philosophy that began in 2011 has paid off. The amendments on this year’s ballot might well ensure the next fifteen years look the same.