New from the experts at the N.C. Budget and Tax Center:
Upcoming Senate budget resolution vote paves way for windfall for wealthiest, destabilization of NC budget
This week, the U.S. Senate will vote on a budget resolution that will allow them to fast track tax changes that are likely to primarily benefit the wealthiest taxpayers and profitable corporations.
The tax plan framework released by President Trump and leaders in Congress will not provide an equal tax cut to all taxpayers in North Carolina. Recent analysis by the Institute on Taxation and Economic Policy found that 57.6 percent of the tax cut would go to the richest 1 percent of taxpayers in North Carolina. These taxpayers would receive an average annual tax cut of $50,440 a year. This is roughly equivalent to the annual income of the median household in North Carolina as of 2016.
In contrast, both the middle income group and the poorest in our state would receive a smaller share of the tax cut compared to the wealthiest. The poorest in our state, those with an average annual income of about $13,000, would only receive 1.7 percent of the tax cut, which would be equivalent to $80. Meanwhile, the middle income group, with an average income of $45,000, would receive 12.2 percent of the tax cut, which would be equivalent to $550.
Due to the loss of revenue from these lopsided tax cuts, the Senate is likely to follow the House’s budget resolution, which proposes $5 trillion over 10 years in cuts to health care, food assistance and other public services. State policymakers will have to decide whether or how to deliver these services with limited options given the additional tax cuts already scheduled to take effect at the state level on Jan. 1, 2019.