NC Budget and Tax Center

Newest Senate Tax Plan remains costly and increases tax load for low- and middle-income taxpayers

The latest Senate tax plan continues to provide large tax cuts to the wealthiest taxpayers and profitable corporations, while shifting more of the overall tax load to middle-class families and reducing revenue for schools, health care and other services by nearly $1 billion each year when fully implemented. Yesterday, Senator Berger released the Senate’s latest tax plan after a week of negotiations behind closed doors with the House. While Senators state that many of the criticisms of their earlier bill have been addressed, the loss of revenue remains high.

In order to bring down the overall cost of the bill – from $1.3 billion to just under $1 billion under the new tax plan – the Senate plan shifts the tax load to the bottom 80 percent of taxpayers, who on average will see their taxes increase. This tax shift is a result of the combined impact of expanding the sales tax base to more goods and services, the loss of the personal exemption and the cap on itemized deductions. By contrast, the top 1 percent will see their taxes cut on average by nearly $11,000, with 56 percent of the total net tax going to the richest taxpayers.

 Senate 5thed Chart

The Senate tax plan fails to address the state’s upside-down tax system and actually makes it worse by skewing it even more in favor of the wealthy and profitable corporations. The significant reduction in revenue means further cuts to public education, health care, and public safety in the years ahead. A tax plan that shifts the tax load to low- and middle-income families is not a plan that promotes economic opportunity for all North Carolinians.

9 Comments

  1. Doug

    July 2, 2013 at 4:24 pm

    Well 0.3% of $52,000 is $156 if you assume it is on the full income base. $13 a month at that level is hardly the life shattering event you purport it to be. These posts look a lot less relevant when you put the real world dollars out there:
    $32,000 x 0.2% = $64/yr or about $5 per month max for that bracket.
    $52,000 x .3% = $156/yr or $13 per month…..I will gladly pay my share into that.
    $84,000 x .2%= $168/yr or $14 per month……not too bad at that level.

    See we all pay our fair share!

    And do not forget the one perk you guys get for this plan. IF the dems ever get a majority again…..they will just increase the income tax and keep the expanded sales tax base in order to penalize everyone as much as possible and expand even more government perks…..think of the long game guys!

  2. RJ

    July 2, 2013 at 7:30 pm

    So you “will gladly pay” your share of my tax break of some $700 per month, assuming I make 400K from my self-employment? Thanks, Doug. That’s mighty big of ya there, sport! Keep it up!

  3. RJ

    July 2, 2013 at 7:35 pm

    And those folks there at Lejeune and Bragg are also helping me out! I love it when North Carolinians of all stripes come together to give common folks like me a break. I might hire you, Doug, to shine my shoes every other week so you can pay that little extra in taxes for me. I’m all about spreading it around, don’t ya know. Always giving…

  4. RJ

    July 2, 2013 at 8:28 pm

    Doug: About that shoe shine gig… Since it will be a taxed service I’m going to let you shine my shoes every 10 days instead of 14 since you’ll be paying taxes on the work. See how magnaminous the rich like me can be? Oh, and you need to bring black and cordovan polish, just in case. I might even tip you with your money!

  5. Doug

    July 3, 2013 at 11:14 am

    Well RJ, since you are making $400k why don’t you check that box to “contribute” more since you seem to have it in your heart to do so? No one is saying you are required to accept the new rate if you do not feel it is your personal fair share. In my comment I was referring to my own personal bracket as an example in that I am willing to take on a few dollars more a month as that is evidently my “fair share”. When you put actaul numbers to the graph, you can see it is not a real life changing event for much of anyone. This whole debate against the tax cuts is full of sound and fury….signifying nothing.

    As an aside, be careful or you are going to sound like goober may-may with the tin foil hat with your inaccurate comments. You go on with hysterical comments like $5, $13, or $15 is going to break the backs of people.

  6. RJ

    July 3, 2013 at 12:27 pm

    You’re right, you paying $15 more a month and me saving $700 a month doesn’t really change either of our lives that much, since you will just have to skip a couple of fast food meals and I can now finance yet another Land Rover to put in my garage… It will be good for both of us.

    And don’t forget your shine box!

  7. Doug

    July 8, 2013 at 10:51 am

    And just think. Skipping that McDonalds will cut down on the obesity problem. No need for Obamacare!

    Oh, and I got something you can shine…..I for one already have plenty to do considering I am gainfully employed, but I am sure some of your progressive friends can come over and shine you up. They probably need jobs anyway.

  8. RJ

    July 8, 2013 at 12:20 pm

    Thanks for setting me straight with your fact-and-number-filled rebuttal.

  9. Doug

    July 8, 2013 at 3:06 pm

    You are welcome. The facts here actually speak well to the thoughtful direction NC is going, but it is good to highlight it down to the typical person (such as the $13-15) to show that it is not as big of a deal in most people’s lives. Kind of like the sequester everyone was up in arms about, but no one is really missing anything but unessential services like fireworks on the 4th.