What would the House tax plan mean for North Carolina taxpayers? In this blog series we highlight the experience of sample taxpayers under the House tax plan. In conjunction with a distributional analysis of the tax plan which gives a better picture of the full impact, these fictional but true to life profiles will demonstrate that middle-, fixed- and low-income taxpayers would lose under this plan while the wealthiest will gain.
How a supposed tax cut can still equal an overall loss
Bob and Sue are married with an infant and toddler. Bob teaches 2nd grade at the local public school and Sue stays at home to take care of their two young children. With Bob’s salary as a teacher, they make about $46,000 a year. They often feel like they’re struggling to afford the necessities and live paycheck to paycheck. They aren’t able to go out to eat or take trips with the kids, but they are able to provide the necessities.
Under the House tax plan, Bob and Sue would see their tax load go down by about $63, or about 2 percent compared to current tax laws. When the couple becomes aware of this slight reduction in their tax load, they aren’t very excited because they have also been following the state budget debate and know that their oldest child, who they thought would be eligible for Pre-K services, would no longer qualify due to budget cuts that would have to be enacted to pay for the tax cuts. Read More