When the N.C. General Assembly passed a controversial overhaul to the state’s taxing system last year, the promise out of the mouths of Republican sponsors was that it would put more money back in taxpayers’ pockets.
But that’s not the case, the Associated Press found today in a factcheck its reporters conducted on the state’s new tax plan.
“It’s true that the state’s income tax rate is going down for every taxpayer in 2014,” the news agency wrote in an article published today. “But that does not mean all taxpayers will actually pay less to the state government over the coming year.”
That premise of lower tax bills, which has been echoed and repeated by Republican Gov. Pat McCrory, was scrutinized closely at the time of the bill’s passage and debate, with many calling foul on the claims including Cedric Johnson of the N.C. Justice Center’s Budget and Tax Center.
Johnson, in a report published in August, estimated that the bottom 80 percent of North Carolina residents will pay more in taxes under the new tax plan while needed services were slashed and the wealthiest in the state would see reductions in their tax bill. (Disclosure: N.C. Policy Watch is also a part of the N.C. Justice Center.)
The Associated Press took another look this week at the changes to the state’s tax code for 2014 and agreed that the tax breaks promised by lawmakers would not materialize for many people in the state.
From the AP’s “Factcheck“:
McCrory praised the GOP-backed tax reform package in a Dec. 13 op-ed piece printed in the state’s largest newspapers.
“Starting on Jan. 1, the income tax rate will go down for every North Carolina taxpayer,” McCrory wrote. “We made our rates more competitive to allow existing businesses to create jobs and attract new businesses to the state. North Carolinians will see more money in their paychecks next year.”
In a Dec. 18 video issued by McCrory’s office to tout his administration’s 2013 accomplishments, the governor said: “North Carolinians will keep more of their hard-earned money thanks to historic tax reform.”
But McCrory failed to mention that he and Republican lawmakers allowed the expiration of the state’s Earned Income Tax Credit, a measure that boosted the income of the state’s poorest workers. The tax reform package also eliminates several exemptions and deductions that benefited working class taxpayers, including a popular program that allowed families a deduction on pre-tax income into a college savings account.
According to a recent analysis by the legislature’s own Fiscal Research Division, a married couple with two children making $20,000 a year will go from receiving a $222 tax rebate in 2013 to owing $40 next year, a net swing of $262.
At the other end of the income scale, a married couple with two children making $250,000 will get a $2,318 tax cut in 2014, according to the analysis.
McCrory communications director Kim Genardo said the governor’s statements referencing the new benefits to North Carolinians shouldn’t be interpreted as applying to all taxpayers.
“He didn’t say ‘every’ or ‘all,’” Genardo said. “You’re taking it literally that we mean every single citizen, and we did not say ‘everyone.’”