Preliminary Analysis of House Tax Plan
In response to yesterday’s release by the House of their plan to cut taxes, we noted that the plan represented a cut for the richest taxpayers and that the shift to an expanded sales tax on goods and services would hit middle and low income families hardest.
With more details on the plan available, we are able to provide a clearer estimate of the impact of the House tax shift plan on taxpayers. The results show that the combined effect of increasing reliance on the sales tax while cutting income taxes will mean 80 percent of the taxpayers will carry an increased tax load compared to the state’s current system. Moreover, 35 percent of the income tax cuts go to taxpayers earning on average $940,000.
It is clear that the richest taxpayers benefit under this plan while the low- and middle-income taxpayers will experience a greater tax load. In particular, older North Carolinians with income below $19,500 or those with medical expenses, middle class households with dependents older than 16, and heads of households with no children will be among the hardest hit.
The House tax plan is a tax shift not tax reform.