CHARLESTON, SC – Last week, North Carolina’s Republican governor, Pat McCrory, signed a new piece of tax legislation that, among other things, eliminates the authority of the state’s cities and towns to collect what’s known as the “privilege license tax” beginning next year. The move, a victory for GOP lawmakers, marked the end of a week of controversy in the legislature’s short summer session.
Fair warning: to explain why this was a controversial issue, I’m going to have to get into a bit of tax policy. But this article isn’t really about taxes—it’s about the case for Voxsplaining state and local news.
A Voxsplainer, for the uninitiated, is an explainer in the style of Vox.com, the new site launched by Ezra Klein, Melissa Bell, Matt Yglesias & co. that aims to help readers “understand the news.” Vox’s techniques and its sensibility have their admirers and their detractors. But one of Vox’s goals—offering comprehensive, engaging online summaries of issues in the news so that curious people who don’t know the backstory and aren’t experts can figure out what the heck is happening and why—fits right in with the challenges I encountered as a reader with the privilege tax story in North Carolina.
Everything you need to know about the privilege license tax. Or not.
So, the privilege tax: it’s a levy that cities and towns across North Carolina impose on businesses that operate within their borders, using a variety of formulas to generate tens of millions of dollars in revenue annually for municipal budgets statewide. By all accounts, it’s an inconsistently applied tax. Some businesses pay a little, some pay a lot, and a given business can pay widely different taxes in different municipalities. Big-box retailers like Target and Walmart, for instance, can pay up to $20,000 in some municipalities; a local mom and pop might pay 1 percent of that; other types of businesses may be exempt altogether. You can see why big retailers, and the anti-tax politicians who gained power when Republicans swept into the state capital after 2012, don’t like it. At the same time, few people defend the levy as ideal tax policy—but plenty of people worry about the effect on local government services with the privilege tax revenue now set to disappear, and doubting state lawmakers’ pledges that the budget hole will be filled somehow.
I didn’t know any of that on Tuesday after Memorial Day weekend, when, after a few days during which I’d been a little more interested in beach sand than Tar Heel tax policy, I first picked up news of the proposed change from Bloomberg. (At the time, state lawmakers were proposing to cap the tax at $100 per business, not eliminate it outright.) I was struck, though, by how the article framed the move as part of continuing efforts by Republican lawmakers in the statehouse to shape policy in Democratic-run cities like Charlotte and Raleigh. That was one of the major political storylines in the state last year, so there was a sense of, “Here they go again.”
But when I turned to local coverage in a handful of North Carolina papers to learn more and follow how this played out, it kind of gave me a headache. For instance, a piece in The Charlotte Observer seemed to expect a lot of institutional knowledge about the issue from readers, jumping into the back-and-forth over what the impact on local budgets would be and dropping in somewhat random facts like how many cities impose the tax without ever exactly explaining what the tax is, how it works, why people oppose it, and how cities came to rely on it as a revenue source in the first place. I didn’t really get that from an early Associated Press report either.
Later AP coverage was more helpful, and there were some other good efforts around the state. An article in the Raleigh News & Observer, published as lawmakers were debating the proposal, did a good job pointing out how the tax levy varies from town to town, and the role it plays in municipal finances. In the Asheville Citizen-Times, I found perhaps the most comprehensive story on the tax proposal—heavy on the local implications and fairness concerns between small and big businesses, but also with some background on how GOP lawmakers had been seeking an opportunity to reform the tax system, and even details on the formula Asheville uses to tax retailers.