NC Budget and Tax Center

Preliminary Analysis of Joint Tax Plan: Still a big tax cut at the top

As we wrote yesterday, the joint tax plan negotiated by leaders in the House, Senate and the Governor is a bad deal for North Carolinians.

Here is why:

BTC_Joint Tax Plan

Comprehensive tax reform means addressing the problems with our tax code: that it is not aligned with the economy, that it is upside-down and unable to support the changing needs of our growing population and economy.  This tax plan makes these problems worse.

11 Comments

  1. Doug

    July 16, 2013 at 10:13 am

    Well, the overall plan is a step in the right direction. And at a maximum, your “huge” shift to the middle class is a maximum of around $11 per month….or $134 per year. 0.2% X $67,000 = $134 just to take the highest percentage in the “middle class” and the highest bracket. Once the huge amount of fat and waste are necessarily cut out of the government, and the state becomes competitive enough to warrant growth we will be fine. Your much ballyhooed “middle class” will be fine with the negligible tax change.

    What you should REALLY be worried about is the huge inflationary currents building with the continual printing of money that Obama is in line with. Then there is the hostile policies by the current administration on oil and fossil fuels, and the continual push for more ethanol in gasoline. Then there is the huge spike in food prices. All of these issues are more detrimental to the “middle class” than anything the NCGA is doing. Once the government “bubble” being created by the Fed bursts, the middle class will be decimated….and you guys will probably be glad our GA has taken steps toward fiscal sanity in NC so that some of these programs you love may have a chance of being preserved.

  2. Doug

    July 16, 2013 at 10:20 am

    What also would be interesting for you to present is the number of the population in each bracket. My bet is we have a better chance of increasing government funding by the negligible change in the tax brackets…..or we will get the same funding. There are likely only a few hundred or few thousand in that top bracket while there are probably millions in that low to middle bracket range. You are likely going to get a lot more funding from a huge number only paying $2 a month as the $12,000 bracket will vs a few hundred in the top bracket. And then think…..the users of more services get to pay their fair share! Why they could skip one pack of cigs or beer a month and they are golden, and they will get back more than that via SNAP anyway!

  3. Bendal

    July 16, 2013 at 10:40 am

    Doug, you’re sounding like you’re either one of the 1%-ers or an apologist for them. This is a tax shift towards the bottom no matter how anyone tries to spin it, and rewards big business with a fantasy hope that now they’ll start creating jobs since they are getting a big tax break. Except, the people who buy products that increases demand is what drives business expansion, not tax breaks. If there’s less money in people’s pockets thanks to this “tax break”, where’s the demand going to come from? It’s just more conservative wishful and failed thinking.

  4. Mark

    July 16, 2013 at 10:52 am

    Are the figures in the .pdf household or individual incomes?

    Thanks!

  5. ML

    July 16, 2013 at 12:46 pm

    Douggy, the continual printing of money which is building the “government bubble” (not even sure that’s a thing) is being pushed by Bernake at the behest of Wall Street for their benefit.

  6. Doug

    July 16, 2013 at 1:23 pm

    Bendal,
    Actually I am in that $67k range, and my common sense shows me that this is no tectonic shift to get all hysterical about.

    ML,
    Bernake is printing the money primarily for the government, that is how they are able to expand the monetary base and ramp up debt from ~$10 trillion to >$16 trillion in less than five years. You may want to take a cruise over to read John Mauldin at frontlinethoughts.com, maybe sign up for his newsletters. He spends a lot of time on this and related macro economic topics, and communicates well as a layman, and has a lot of economic contacts. You might learn something about the bubble we are in….and one is that it is far from being primarily a Wall Street thing, nothing is that cut and dried. You might be surprised to learn about how we are propping up other countries and such….give it a try.

  7. ML

    July 16, 2013 at 1:43 pm

    Not much of a surprise to me, I’ve read some Mauldin but I’d suggest you take a look at Paul Krugman. His blog requires a little more understanding of economic policies, specifically Keyneism which is likely not your cup of tea. Nonetheless, I’d say that Bernake at the behest of Wall Street is about as cut and dry as saying “the huge inflationary currents building with the continual printing of money that Obama is in line with.” It seems we both took the same issue with each others simplified explanation of the supposed bubble and supposed inflation. I would like to point out that I am in favor of ending the quantitative easement practices of the fed but Bernake has free rain until his term ends where the president can appoint another chair. However, if we are going to say they are printing money for the government in the sense that it is printed then handed to the government you are correct but in reality the new money is used primarily in issuing bonds and for record low interest rates all in the hope of spurring economic growth aka wall street. On the other hand if you want to blame Obama, then by all means but like you said, nothing is that cut and dry.

  8. Doug

    July 16, 2013 at 3:47 pm

    I read a bit of Krugman, like you said I don’t put a lot of credence into what he says since Kensyian thought is being proven so wrong the way it is being used in the current state of things. Mauldin’s newsletters however come from several lines of thought so we do get some differing views. Plus they are an easy read for those who are not economic geeks which is why I recommend him.

  9. Doug

    July 16, 2013 at 7:05 pm

    ML,
    Reflecting on the final part of your last comment. That actually describes a government bubble….you know how we get used to the easy money…..the people with the easy money (government) go on a drunken spending spree up to their credit limit….in this case beyond….until there is no appetite for our bonds….then BAM! it is no longer ok. Does that sound like anything you have seen before? I will give you a hint….housing, HELOC loans, banks and homeowners think the cash will always be there? That is why we called it the housing bubble chasing the money by allocating capital to a poor choice.

    http://dailycaller.com/2013/07/05/report-government-not-banks-are-responsible-for-housing-bubble/

  10. ML

    July 16, 2013 at 9:23 pm

    Well you’re right to an extent but you leave a few key players and dismiss the fact that the program was a failure to the extent that it put too much faith in the free-market to self regulate. Had it been adequately funded and properly regulated, the housing market, instead of blowing up, we would have seen more deliberate but steady growth. There would have been no junk bonds packaged and sold once the bought and paid for rating agencies give them their stamp of approval. And just to quote from a different thread:

    Nothing is that cut and dry Douggy. The crisis resulted from a combination of complex factors, including easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real-estate bubbles that have since burst; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.

    Then, struggling banks in the U.S. and Europe cut back lending causing a credit crunch. Consumers and some governments were no longer able to borrow and spend at pre-crisis levels. Businesses also cut back their investments as demand faltered and reduced their workforces. Higher unemployment due to the recession made it more difficult for consumers and countries to honor their obligations. This caused financial institution losses to surge, deepening the credit crunch, thereby creating an adverse feedback loop.

    But yea it was the sole fault of the democratic led CRA. To bad no repubs were there to say anything…
    – See more at: http://pulse.ncpolicywatch.org/2013/07/16/north-carolinas-economic-growth-some-of-the-fastest-in-the-south-and-the-nation/#comments

  11. [...] because the final budget includes tax cuts that will primarily benefit the rich while significantly reducing resources to pay for vital services, examining how the state will [...]