The Locke Foundation was having fun with math yesterday in an effort to defend a fiscally irresponsible package of tax cuts in the final budget lawmakers are close to approving. Why? because—wait for it—they would like you to think they haven’t just given another green light to tax cuts that further pump up the gains for wealthy taxpayers while making virtually no progress in addressing the tax load carried by middle- and low-income taxpayers.
Amidst their convoluted and selective use of the numbers, they try to confuse their readers about three primary facts regarding the state’s tax code after the passage of this budget:
- The average tax cut received by the taxpayer in the top 1 percent (whose average income is $1 million) compared to the pre-2013 tax code is nearly $22,000, which is more like 96 times the tax cut that the middle-income taxpayer in North Carolina will receive each year as a result of tax changes since 2013. The average tax cut for middle-income taxpayers is $225.
- Once the final budget passes, one in three of net tax cut dollars goes to the top 1 percent of taxpayers, whose average income is a million dollars. Under the final budget, nearly 80 percent of net tax cuts since 2013 will flow to the top 20 percent of taxpayers once all the latest tax code changes are fully implemented.
- When we look in isolation at this year’s tax plan, policymakers may have paid attention to their egregious track record when it comes to addressing the tax load for most North Carolinians but they have fallen short of setting our tax code right. Their final tax plan still gives the wealthiest taxpayers the majority share of the net tax cut compared to current law. And their full track record shows their failure to put middle- and low-income taxpayers front and center as they make their tax policy decisions. Budget writers and supporters don’t want to talk about all the changes that have happened since 2013, the loss of the personal exemption and other credits and deductions that benefited working families, including the Earned Income Tax Credit and the Child and Dependent Care Tax Credit, as well as the broadening of the sales tax.
Still worse, with this final budget they continue to push us further towards a single revenue option in addressing future downturns—raising the sales tax, which will inevitably mean asking more from low- and middle-income taxpayers again.
Rather than try to present and sell tax cuts that largely benefit the wealthy and profitable corporations as the everyman approach to growing the economy, which it isn’t, a more urgent math problem needs to be worked out, sooner rather than later.
A year from now, how are leaders going to pay for the impact of the tax cuts, which will reduce available revenue by $900 million once fully phased in? The price tag is much higher than the $521 million cost of the tax cuts in the final budget.
What would you urge them to make possible for the people and communities of our state if you had even a fraction of the estimated $3.5 billion that we now won’t have annually because of tax changes since 2013?
My rather simple answer to the budget writer’s math problem is this: Just stop this failed tax-cut experiment now. North Carolina doesn’t have any more time to wait for leaders who can’t figure out what Kansas and 30 years of history have showed us.
Tax cuts for the wealthy aren’t going to grow our economy, and austerity isn’t going to generate opportunity.