In January, Representative Alexandria Ocasio-Cortez (D-NY) proposed the idea of raising marginal income tax rates — the tax imposed on each additional dollar of income after a pre-determined cut-off — on high incomes ($10 million+) as a means of raising revenue for key investments and addressing growing income inequality. Since then, a number of members of Congress have put forward ideas about how to tax higher incomes at higher rates.
According to a recent poll, the majority of Americans agree with Representative Ocasio-Cortez’s proposal.
State policymakers across the country have also put forward proposals to make higher incomes subject to higher tax rates. The Center on Budget & Policy Priorities has catalogued these efforts here. As one example, in his 2019 budget, New Jersey Governor Phil Murphy proposed implementing a 10.75 percent rate on gross incomes over $1 million, in addition to other tax increases, to help raise revenue for New Jersey’s priorities.
Here in North Carolina, the General Assembly has the ability to place a higher rate — up to 7 percent — on incomes over $1 million and provide the dollars needed to meet community priorities.
Earlier today, we released an analysis of what this would mean for North Carolina. A graduated tax structure that taxes higher incomes at higher rates — particularly one that places a top marginal rate of 7 percent on income over $1 million — could raise roughly $362 million in revenue for priorities in communities across our state and address, in part, the state’s upside-down tax code.
If North Carolina seeks to fulfill its commitments and ensure prosperity for all of its residents, then it must take advantage of sound policies that create opportunities to raise revenue. As research shows, such policies have been enacted elsewhere without negative effects on the economy.
Marginal income tax rates on high incomes can help North Carolinians afford investments that decrease racial inequities, build economic opportunity, and spur growth, such as high-quality education, improved support for low-income families, and better roads and other infrastructure improvements.