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The truth about the tax plan hasn’t changed: Most families will pay more

If you dressed a wolf in sheep’s clothing, would you then believe it was a sheep?

The leadership in the General Assembly and its allies hope you will. Proponents of the state’s new tax law are trying desperately to justify it, most recently by citing pennies in tax cuts for low- and middle-income North Carolina families in 2011, hoping you’ll ignore the harm the recently passed package will cause.

Most of the 2013 tax plan goes into effect this year, and for the vast majority of North Carolinians the picture is bleak.

The Budget and Tax Center’s analysis of the plan [1] shows that when you consider all the tax changes and compare them to previous tax law, on average, people making under $84,000 a year – the bottom 80% of North Carolina taxpayers will see their taxes go up.

In a new analysis, proponents of the plan are touting the 2011 expiration of a temporary sales tax increase as evidence that low- and middle-income earners are better off.  They fail to note that lawmakers allowed a surcharge on high-income earners to expire (a tax cut of around $200 million [2]) in 2011 too.  The expiration of the surcharge will actually generate an even greater tax cut for high-income taxpayers.

There are other key facts that get soft-pedaled in the Locke Foundation’s analysis [3]. Specifically:

The Locke Foundation states clearly that there will be winners and losers under this tax plan. On that we can agree.

We can also agree with another one of its findings: that the majority of the benefit goes to a small share of taxpayers.  Nearly two-thirds of the tax cut, by the Foundation’s own calculation, goes to those earning over $100,000 a year, the top 11 percent of taxpayers in North Carolina.

There is no doubt that the tax plan is anything but fair in how it treats low- and middle-income North Carolinians.

Proponents can only ignore this reality for so much longer.