NC Budget and Tax Center

Experience of Low- and Middle-Income Taxpayers Down the Road if Senate Tax Plan Passes

If the Senate tax plan moves forward, it is very likely that many low- and middle-income taxpayers will see their tax loads increase .

The Senate plan, in addition to the House Plan, do not include the Earned Income Tax Credit, the best tool for ensuring that working low- and middle-income taxpayers are not carrying a heavier tax load than their wealthy neighbors. This decision by Senate and House leadership to end the Earned Income Tax Credit will impact more than 907,000 North Carolinians.

When you look at the Senate plan combined with the end of the state Earned Income Tax Credit and keep in place the local tax on groceries, it’s clear that low-income working families would pay more, while the rich pay less.BTC_Tax Shift Continues_Senate Tax Plan

While the Senate tax plan proposes the elimination of the local food tax, it is difficult to imagine that it won’t remain in place. When local governments start receiving less funding from the state because of the Senate’s tax plan, local officials will have to turn to the only tools they have available to raise revenue needed to pay for services. Otherwise, the only alternative is to reduce services that North Carolinians value including playgrounds for children, trash collection, public libraries and supports to seniors and children in need. The Senate tax plan allows counties to hold a referendum on the grocery tax, and even then, after five years the local food tax can be reinstated without referendum.

A continued local food tax and elimination of the state Earned Income Tax Credit is key to understanding how low- and middle-income taxpayers could be treated under the new tax code if the Senate plan moves forward. The bottom 80 percent of taxpayers on average would see their total taxes as a share of their income increase while the top 1 percent continues to get a significant cut in taxes as a share of their income.


  1. Doug

    June 20, 2013 at 11:13 am

    It would be interesting information for you to present how much in dollars and percentages that those 3-4 bars that are getting the cut represent. My spidey sense tells me that would throw your argument out the window.

    And all this over an increase of what 0.25% of income on that lowest (assuming I am reading the graph right, and I am sure you have some other spin around it) 20%? Why not translate that to dollars? Just for fun…and to try to make the largest number possible….what is .25% of say $35,000 which is probably well over the high end of the lower 20%? I know this does not take into account what the person in that bracket pays already….but it will actually over state the tax increase of roughly $7 per month since there is no provision for some deductions and such.

  2. david esmay

    June 20, 2013 at 12:24 pm

    So D-boo-boo has a super power, (spidey sense), and as with all super heroes you have a curse, which is puerile conservatism.

  3. Cedric Johnson

    June 20, 2013 at 1:35 pm

    David, at the most basic level, a tax plan (the Senate plan) in which three-quarters of the net tax benefits flow to the richest 5 percent of taxpayers certainly warrants attention and concern. Can we at least agree that this tax plan tilts the scale heavily in favor of the wealthy and profitable corporations? If not, please provide evidence that debunks this fact.

  4. Cedric Johnson

    June 20, 2013 at 1:36 pm

    I’m sorry David, my comments were posed to Doug. Pardon me!

  5. Allison Ward

    June 20, 2013 at 2:08 pm

    The premise of keeping one’s spending rate below one’s income is a reality that everyone must follow. However, in the last 6 years many Americans have additional elements in their budget realities that every Republican *started* and is now loathe to address: TWO wars-one a ten year old disaster-which pillaged the national treasury and the resulting devaluing of nearly every home and every stock/retirement fund in the nation due to the economic downturn. Let’s not forget continued HIGH UNEMPLOYMENT. Please point out those still in a state of disconnect to me. Untold MILLIONS have been FORCED out of the middle class-by an out of control Wall Street-and farther down the economic scale because the markets heaved, our nation nearly fiscally imploded and devalued everything, with no way to get back on our feet-cause there’s NO WORK.

    YOU idiots: Do you really believe NOW is the time for austerity?

    How are these particular Republican led tax proposals helping me get A JOB?

  6. Doug

    June 20, 2013 at 4:06 pm

    Actually the democrats are at least 50% culpable in both situations as a large number voted to go to war with Iraq, and Afganistan was a no brainer at the time. But the housing bust is what I want to focus on. If you look at the history of the housing crash there are three responsible parties in order of their culpability:
    First, democrats were huge proponents of the community reinvestment act which basically told banks they have to invest in poor credits in order to promote home ownership. Basically another government perk to push homes.

    Second, is the Federal Reserve. They were pumping the system with low rates, basically creating a bubble (which by the way they are currently doing with government debt, just wait for that axe to fall).

    Third are the banks, they obviously went with lax standards once they were forced into the loans, then found a way to pawn the loans to Fannie and Freddie, then buy them back via securities so they are covered by the government guarantee.

    Oh, and Daveboo boo, try to find a way to do something other than call names…otherwise you continue to show that all my arguments have merits that you are just intellectually unable to refute.

  7. Doug

    June 20, 2013 at 4:13 pm

    You guys still have not researched what percentage these richest 5% pay. When they are already paying the lion’s share of the taxes, they are obviously going to reap a goodly amount of a tax cut. It is difficult to have a tax cut when you already pay almost zero.

    Oh, and think about my math too. I know it is difficult for liberals to think with their left brain (the logical side) when one of their chosen few are actually going to start paying some taxes, but come on….give it a try.

    Austerity Allison….I missed that part because the rest of your post was so ridiculous.

    First, I would hardly call the current budgets “austerity”, the waste that is baked into the state budget over the previous decades can definitely stand to be cut.

    Second, Just wait until the bond market enforces the austerity on the state, think Greece, when there is no choice to be made. It will make a situation like the much hyped, but little noticed, “sequester” at the Fed level look like good times. We really have to begin preparing for the bad times now.

  8. david esmay

    June 20, 2013 at 9:13 pm

    Your arguments have no merit, never have, never will. The regurgitation of debunked right-wing talking points and platitudes is not an argument. Like I stated in the past, your arguments have no merit, no supportive evidence and your ad hominem attacks will be met in kind, Dougy- boo- boo.

  9. Cedric

    June 20, 2013 at 9:35 pm


    As for the lopsided distribution of benefits resulting from the Senate plan (which you seem to be okay with, and definitely have that right to be if so), the top 5% of earners in this state certainly do not pay three quarters of total state and local taxes.

    The narrative that the CRA was the cause of the financial/housing crisis, while convenient, has been shown to be simply false. For one, private financial entities were not subject to the CRA and were out ahead of the game in this speculative lending area. And then somehow banks like JP Morgan and Wells Fargo entered the crisis with much stronger balance sheets than banks such as BOA and Wachovia. I don’t think this is a coincidence when you consider that the latter two banks had acquired private financial entities that were heavily engaged in toxic subprime lending activities?

    Furthermore, if one acknowledges the ability of money to increasingly influence politics and shape public policy in this country, if Wall Street really felt that lending in accordance with the CRA was detrimental to its sustainability, they’d have pared down the CRA well before 2007.

    As more information becomes public regarding the underlying mechanisms that facilitated the calamitous financial/housing crisis, we are reminded of what we already know. Dogged pursuit of personal gain in an unfettered capitalistic construct — and often within institutional frameworks that are shaped and led by humans — tends to lead humans to participate in facilitating their own demise. I don’t think we need more “proof” of this notion-become-fact.

    Thanks for the engagement.

  10. NoGOPinNC

    June 21, 2013 at 9:24 am

    Something that “tools” of the right like Doug fail to mention is that the wealthy should pay more for our infrastructure…they didn’t build that we did and we allow them to use our airports, highways and stable society to build personal wealth. I would LOVE to see a flat tax with no deductions for anything, but I can assure that is the last thing the elite will allow to happen, which is why I pay a higher percentage of taxes than the newly rewarded art pope…whomever thinks you can’t buy a position in govt. need look no further than our new leaders .

  11. NoGOPinNC

    June 21, 2013 at 9:28 am

    And I would like to commend this site …you cannot post a dissenting opinion on any of art’s supposed think tanks namely that hack site civitas or popes propaganda machine….they do not represent real North Carolinians only their friends on the far right.

  12. Doug

    June 21, 2013 at 9:37 am

    You also cannot post a comment agreeing with them on some of the pages…however there are some pages where you can do both on Civitas. That is one of the reasons I rarely go there as it is to their blogs as the are not as good as some of the other Conservative sites, and I do take issue with that. Really, the John Hood articles are the only reason to go to Civitas. That and the Moron Monday Mug Shot Update section.

  13. NoGOPinNC

    June 21, 2013 at 10:55 am

    No Doug you are mistaken they censor everything including slanting their polling. Civitas review or civitas spew as it is becoming known….is a front for the lead trinket know our new de facto leader ol ART, but just because a few boot-lickers a minority (who somehow mysteriously swept the elections) voted these clowns in I does not mean All of NC is for sale.

  14. Doug

    June 21, 2013 at 4:10 pm

    And Polcy watch does not? I am sure they poop rainbows an unicorns and as far as you are concerned when they make a statement…all is then right with the world. Good luck being a sheep.

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