There are reports that the state Senate and House leadership is working on a compromise tax plan—with the catch, of course, being that many North Carolinians will likely not view the final tax plan as much of compromise, especially in light of how it will probably treat low- and moderate-income taxpayers.
In order to truly be fair to low- and moderate-income taxpayers, the upside-down nature  of the state’s tax code must be addressed. But, as our analysis shows, leadership is pursuing tax plans that ignore this principle of equity. They’re also ignoring the important role that the Earned Income Tax Credit (EITC) plays and confusing how the EITC matches up against the standard deduction  and a zero tax bracket .
You may recall that at the beginning of session, legislators chose to reduce the state’s EITC—which is a modest but vital support for nearly 907,000 workers earning low wages—and to axe the credit at the end of the 2013 tax year. This credit helps ensure some measure of financial stability for struggling families at a time when good-paying jobs are still hard to come by.
At the time, legislative leadership asserted the state could not afford the EITC’s $105.2 million price tag. Meanwhile, they are pushing for the repeal of the estate tax and huge tax cuts for the wealthy and profitable corporations that, when combined, cost significantly more than the EITC but offer fewer benefits to North Carolinians and the state’s economy.
The chart  below contrasts the price tag of the EITC and other prudent choices that available to the Senate leadership against the flawed change leadership is pursuing.
There may be problems with North Carolina’s tax code, but this tax credit for low-wage workers is not one of them. We should stop giving tax breaks to the wealthy and profitable corporations, especially when they come at the expense of working families.