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The latest Senate tax plan continues to provide large tax cuts to the wealthiest taxpayers and profitable corporations, while shifting more of the overall tax load to middle-class families and reducing revenue for schools, health care and other services by nearly $1 billion each year when fully implemented. Yesterday, Senator Berger released the Senate’s latest tax plan after a week of negotiations behind closed doors with the House. While Senators state that many of the criticisms of their earlier bill have been addressed, the loss of revenue remains high.

In order to bring down the overall cost of the bill – from $1.3 billion to just under $1 billion under the new tax plan – the Senate plan shifts the tax load to the bottom 80 percent of taxpayers, who on average will see their taxes increase. This tax shift is a result of the combined impact of expanding the sales tax base to more goods and services, the loss of the personal exemption and the cap on itemized deductions. By contrast, the top 1 percent will see their taxes cut on average by nearly $11,000, with 56 percent of the total net tax going to the richest taxpayers.

 Senate 5thed Chart

The Senate tax plan fails to address the state’s upside-down tax system and actually makes it worse by skewing it even more in favor of the wealthy and profitable corporations. The significant reduction in revenue means further cuts to public education, health care, and public safety in the years ahead. A tax plan that shifts the tax load to low- and middle-income families is not a plan that promotes economic opportunity for all North Carolinians.

According to documents made available to the media, we have details of one of what could be multiple tax proposals that the Governor’s office is putting into the mix as the House and Senate leadership negotiate a final tax plan.   

While the Governor has clearly continued to prioritize revenue neutrality – an important pursuit in these times – and gets much closer than any of the other plans, his proposal “Alternative 3A” still falls short. Overall, the governor’s tax plan would reduce annual revenue available for public investments by around $215 million upon full implementation, which is less than annual revenue lost from the House ($500 million annually) and Senate ($1.3 billion annual) plans. Read More

McCroryBergerTillisAs legislators work feverishly to wrap-up the state budget, Raleigh’s News & Observer takes the leadership to task in Friday’s must-read editorial that describes this session as  shortsighted, based on the “politics of revenge and destruction.” Here’s an excerpt:

When they got control of the General Assembly, Republicans vowed to drive North Carolina in a new and better direction. Instead, they’re behind the wheel in a demolition derby.

As The News & Observer’s Rob Christensen reported, GOP leaders on Jones Street are in the process of dismantling every positive Democratic-sponsored program or legislation they can get their hands on. And as result, everyone from public school teachers to families on Medicaid to the scientists at the innovative N.C. Biotechnology Center are going to feel the consequences, some of them very bad consequences indeed, from the Republican knives.

Some of the actions are clearly ideological and partisan: abolition of the Racial Justice Act, for one example. But other actions that have been taken or are under negotiation smack of political immaturity. They’re just about doing away with anything the Democrats did in the way of innovative or helpful programs just because…the Democrats did it.

Consider: The legendary Gov. Kerr Scott, “the squire of Haw River,” expanded state unemployment benefits from 20 to 26 weeks in 1951. The benefits are practical as well as humane, because they keep money in the state economy. Republicans are cutting the benefits to a sliding scale of between 12 and 20 weeks. (They’ve also cut the maximum benefit and lost an opportunity to extend federal benefits to the long-term unemployed at no cost to the state.)

Hurting people

Or: The Child Fatality Task Force was created by the legislature under Republican Gov. Jim Martin in 1991 to aim at reducing infant and child deaths. The rate has dropped dramatically. The House wants to end it.

And in the area of enlightened actions to give the public more participation in political financing, Democrats in the legislature in 1977 allowed taxpayers a voluntary check-off on their tax forms to give $3 to a fund to help political parties, and in 2002 created a public financing system for high-level judicial races. They also in 2007 allowed public financing, through a voluntary tax check-off, for Council of State offices of treasurer, insurance commissioner and superintendent of public instruction. Republicans aim to end them all.

These types of actions will hurt people, pure and simple. Read More

Low-income families actually fare worse under House and Senate tax plans

Proponents of the House plan claim that doubling the standard deduction and child tax credit provide a generous benefit to low- and middle-income taxpayers in North Carolina. However, what proponents fail to acknowledge is that, at the same time, they are eliminating the personal exemption allowance and allowing the state Earned Income Tax Credit to expire, which effectively makes our current tax law a better bet for these taxpayers.

Proponents support this claim by highlighting that doubling the standard deduction would make the state have the most generous treatment of the first dollar of income in the country. This claim is simply false. Read More

A report released today by the NC Budget and Tax Center highlights the Senate version of the House tax plan. Far from representing true tax reform, the tax plan would give massive tax cuts to the wealthiest North Carolina taxpayers and profitable businesses. Once all the tax cuts are fully in place, $1.3 billion less in revenue would be available to fund our schools and universities, public safety and other public investments that have positioned North Carolina as a leader among Southern states.

The BTC report highlights others aspects of the Senate tax plan worth noting. The plan does not address the state’s upside-down tax system, in which low- and moderate-income families spend a larger share of their incomes on state and local taxes compared to wealthy North Carolinians. Thus, the Senate plan will continue to ask more from those with the least amount of income and the wealthiest taxpayers will receive the lion share of the benefits of these tax cuts. Read More