HomeWorldNorth Carolina Senate Leader Criticizes Student Loan Forgiveness Tax Exemption

North Carolina Senate Leader Criticizes Student Loan Forgiveness Tax Exemption

RALEIGH, NC (AP) — Efforts to exempt North Carolinians from state income tax on the value of student loan forgiveness announced last month by President Joe Biden are unlikely to succeed given that the most influential member of the state Senate opposes them.

Democratic Gov. Roy Cooper called on lawmakers last week to change state law to correct what he called a “fundamental injustice to many working people who will be hit hard” through paying income taxes.

But Senate Leader Phil Berger told reporters Tuesday that he saw no need to take any action. He said such an exemption would be unfair compared to people who must pay income taxes on the dollar value of credit card debt and mortgage loan write-downs. And Berger also questioned whether Biden had a basis in federal law to declare a pardon.

The White House has said that the value of that forgiveness, up to $10,000 for some and $20,000 for others, is exempt from federal income tax. North Carolina appears to be one of a half-dozen states where the amounts would be subject to state taxes unchanged.

Cooper compared the legislature’s decision last year to exempt Pandemic Paycheck Protection Program loans for businesses from state income tax to student loan forgiveness. But Berger, a Republican from Rockingham County, called the PPP a “completely different situation.”

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“PPP loans were obtained as a result of the shutdown of the economy by the federal government and the state government. And those loans were provided for by federal law … passed by Congress,” Berger said. The student loans, he added, “were not taken out in any kind of emergency situation.”

The White House said Tuesday that roughly 1.19 million people in North Carolina would be eligible for student debt relief under the Biden administration plan. Exactly how much state income tax revenue would be collected is unclear. North Carolina’s individual income tax rate of 4.99% drops to 4.75% in 2023.

said Tuesday that he does not support legislation that would exempt

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