What would the House tax plan mean for North Carolina taxpayers? In this blog series we highlight the experience of sample taxpayers under the House tax plan. In conjunction with a distributional analysis of the tax plan which gives a better picture of the full impact, these fictional but true to life profiles demonstrate that middle-, fixed- and low-income taxpayers would lose under this plan while the wealthiest will gain.
All that glitters is not gold
Ms. Grace is a 67-year-old retired North Carolina resident who enjoys spending time with her grandkids and volunteering in her community. Gracie, as her neighbors call her, lives alone and receives around $12,000 in taxable income, which supplements her social security benefits and helps pay for her monthly medical expenses and other necessities.
Under the House tax plan, the amount of income and sales taxes paid by Gracie would increase, about 6 percent overall, compared to what she would pay under current tax laws. This increase in tax load is a result of the tax plan expanding the sales tax base to cover more goods and services as well as the elimination of the additional standard deduction allowance provided to elderly tax filers. Paying more in income and sales taxes—along with annual inflation— would decrease the amount of money available for Gracie to remain self-sufficient and ensure that her basic needs are met. As Gracie follows the current tax reform debate, she listens more closely for further insight regarding how the competing tax plans would impact individuals such as her. While playing with her granddaughter and chatting with her son about the potential impact of the House tax plan on her she states, “All that glitters is not gold.”