Sin taxes and the tax burden in North Carolina

Republicans who have long opposed gambling and pot now see them as sources of revenue and profit.

As the legislature goes back into session, the prospect of casinos in the state is back in the public conversation. Last year, they extended the length of the long session and then failed spectacularly, handing Senate Majority Leader Phil Berger a very public loss. Berger is downplaying gambling this year but the subject is on everybody else’s mind.

To recap, Republicans introduced the idea of adding four new casinos in the state. One would be affiliated with the Lumbee tribe in Robeson County and the other three would be non-tribal casinos located in Anson, Nash, and Rockingham Counties. The scheme was kept largely under wraps for much the legislation session but became the reason for the legislature staying in session into the fall instead of adjourning mid-summer. Republicans were split over the issue with Berger pushing it from the senate side and the house eventually killing it.

The casinos were promoted as an economic development tool and source of tax revenue. They were also pushed as a way to keep North Carolina dollars in state since Virginia has built one on the state line in Danville. Given the lack of transparency around them, the casinos are almost certainly going to be an economic boon for Republican donors, too.

Republicans are also considering legalizing marijuana in some form or fashion. GOP House Majority Leader John Bell is already selling “CBD and Hemp based THC products” as president of Asterra Labs. I’m pretty sure those products will get you high. They are also another target of GOP tax revenue.

So why are Republicans suddenly supporting issues they have long opposed? Well, as the saying goes, follow the money. They realize they can make big bucks off of the products and, since they are in power, they can funnel it to their friends. They’ve learned a lot from Speaker Tim Moore who has made getting rich off of power an art form. He got his casino years ago and almost nobody even noticed.

They are also looking for ways to cover a looming budget shortfall and to subsidize more tax cuts for the rich. According to the General Assembly’s Fiscal Research Division, the state will begin to run a deficit in coming years. Who better to pay for the loss of corporate tax revenue than potheads and the saps at blackjack tables?

Berger downplays the budget problems, saying people have been predicting them for years and they haven’t emerged. What he doesn’t mention is the massive transfer of funds from the federal government to states during the pandemic that kept state governments afloat and one-time events like the sale of state property like Dorothea Dix Park. And now Republicans are aiming to reduce the corporate tax rate to zero and cut the income rate again, disproportionately benefitting the state’s wealthiest citizens.

Already, Republicans are shifting funds from public schools to private ones by offering subsidies for the richest families to send their children to private schools. Our mental health care system is a mess and we’re losing rural hospitals at a disturbing rate. We are underfunding our state government while cutting taxes for rich people and Republicans seem to want to use sin taxes to make up the revenue loss.

Using taxes on gambling, marijuana, and other extracurricular activities to make up for permanent budget revenue shortfalls is a bad idea. Those taxes should be seen as supplemental, not recurring, because they are unpredictable and will probably lead to other expenses like an increase in law enforcement and treatment facilities. They also prey on poor people.

Republicans are continuing to shift the burden of funding the state from the rich and big corporations to the poor and middle class. They already instituted regressive taxes on services like automobile repairs to make up for tax breaks for the rich. Now, they are going to try to make substances and activities that are currently illegal legal so they can suck more money from struggling North Carolinians.