Who Pays Taxes in North Carolina
Today the Institute on Taxation and Economic Policy (ITEP) released its 2013 Who Pays? report, which provides a state-level analysis of how much state and local taxes are paid as a share of income by income groups. For North Carolina, ITEP’s analysis highlights the state’s upside-down tax system, in which middle- and low-income families pay more in taxes as a share of their income than wealthy families.
The report also highlights that the largest share of taxes paid by low- and middle- income families in North Carolina go towards the sales tax, which ITEP notes is the most regressive tax within state tax systems. Families in the lowest income group pay six times more of their income in sales taxes than the wealthiest families.
Senate leadership recently announced its support for eliminating personal and corporate income taxes and relying heavily on the sales tax to raise most of the more than $12 billion in lost revenue. The ITEP analysis makes clear who would bear much of the tax load from this huge tax shift. Low- and middle-income families would see an even larger share of their income go toward state and local taxes. Consequently, the state’s already upside-down tax system would be made even worse.