A new report from the NC Budget and Tax Center provides the latest confirmation that the steady and ongoing erosion of North Carolina’s tax base by conservative state lawmakers is having a destructive impact on the state and its future. The new report finds that “the new tax cuts, when combined with tax cuts passed since 2013, will mean $3.5 billion in less revenue every year for the state.”
“The new two-year state budget passed by lawmakers included another package of tax cuts that will further limit the amount of revenue available for public investments. The latest tax cuts will reduce annual available revenue by $900 million and, when combined with tax cuts passed since 2013, result in an estimated $3.5 billion in less annual revenue compared to the tax system that was in place prior to tax changes in 2013.
The new budget shows only $521 million of the $900 million in annual revenue loss, due to the way in which lawmakers phase in the tax cuts. The tax cuts kick in starting January 2019 – the second half of the second year of the two-year budget. Thus, lawmakers were not required to account for roughly $400 million of the annual cost of the tax cuts, as the fiscal impact of the tax cuts only reflect half of fiscal year 2019 (January 2019 through June 2019). However, future lawmakers will have to address the unaccounted for $400 million reduction in revenue availability, as the state’s constitution requires lawmakers to pass a balanced state budget.”
The report also finds, perhaps not surprisingly, that recent North Carolina tax cuts have disproportionately benefited white taxpayers:
“Not only have tax changes passed since 2013 held in place systems that solidify income inequality, but they also have reinforced systemic racism that excludes racial and ethnic groups from the path to upward economic mobility by delivering the greatest share of the net tax cut to white taxpayers and undercutting public investments. Eighty-one percent (81 percent) of the net tax cut goes to white taxpayers, despite this group of taxpayers representing two-thirds (66 percent) of North Carolina taxpayers. By contrast, only 19 percent of net benefits go to taxpayers of color, despite these taxpayer groups representing 34 percent of all taxpayers.”
Click here to access the full report.