North Carolina House and Senate leaders continue to consider a flawed proposal that would send more than 600 million tax dollars from revenue over projections to some taxpayers.
Analysis from the Fiscal Research Division and the Office of State Budget and Management reveals that the revenue over projections is primarily the result of income from non-withholding sources such as capital gains, business income, and dividends — sources of income that are almost exclusively held by North Carolina’s wealthiest residents.
These additional dollars are not the result of the state collecting more taxes than should have been collected — they are the result of the rich getting richer.
In North Carolina, 66 percent of all capital gains income is held by taxpayers in the top 1 percent; as such, with revenue over projections largely tied to capital gains and dividends, this means that the revenue over projections are largely due to the rich getting richer.
New analysis from the Institute of Taxation and Economic Policy finds that under the proposed Taxpayer Refund Act, the top 20 percent of NC taxpayers would receive 34 percent of the tax refunds, while the bottom 80 percent of NC taxpayers would receive only 66 percent of the tax refunds.
Research from the Economic Policy Institute shows that in North Carolina, the difference in income is growing and the economy is not working well for everyone.
- The top 1 percent make 20.6 times more than the bottom 99 percent.
- The top 1 percent take home 17.2 percent of all the income
- The average income of the top 1 percent is $902,972.
- The average income of the bottom 99 percent is $43,850.
- The share of all income held by the top 1 percent in recent years has approached or surpassed historical highs.
Research into the wealth gap, a stronger indicator of long-term economic well-being and stability, reveals more pronounced findings:
- Households of color and Black households are more than twice as likely to experience asset poverty (households without sufficient net worth to subsist at the poverty level).
- Households of color and Black households are more than twice as likely to have zero net worth.
- In 2010, the median value of total wealth held by white households was seven times that of Black households.
While the rich get richer and income and wealth inequality continue to grow in our state, North Carolina lawmakers still think it’s more important to give a few hundred dollars in one-time money to taxpayers instead of using the more than $600 million in revenue over projections toward addressing pressing unmet needs that would help communities thrive.
The child care subsidy waiting list is over 30,000 — checks for a few hundred dollars won’t provide more 4-year-olds with the chance to be ready for Kindergarten and receive all of the benefits of a quality early childhood education.
Quality health care is not accessible to all — a check for a few hundred dollars won’t help those in the coverage gap pay for the medicines and care they need for healthier outcomes.
Students are going to school in unsafe buildings — a check for a few hundred dollars won’t pay for the needed investments in school buildings, from mold remediation to lead removal to renovation and construction.
Most significantly, a check for a few hundred dollars won’t undo the disproportionate tax cuts that have been given to the rich and big companies since 2013.
North Carolina taxpayers should not be distracted by the $125 or $250 (to individual filers and married couples respectively) that the proposal would issue. Rather, we must pay attention to the select few who would benefit from this proposal, and urge our leaders to invest in the programs and services that create more equitable outcomes in our state.