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NC Budget and Tax Center

With the tax negotiations well underway and an apparent offer from the House on the table, the debate over whether to adopt a bad tax plan or a worse tax plan will continue this week.  Both plans not only fail to fix the problems with our tax code but they would make the tax code even more favorable to wealthy taxpayers and profitable corporations at the expense of middle-class and low-income taxpayers. Both would also result in significant revenue losses that would put at risk public services that North Carolinians value and that matter to our economic stability and long-term growth.False Choices in Tax Plans _FINAL

The latest developments in the negotiations only serve to confirm these concerns.  It appears that the House is moving closer to the Senate on some of the provisions which means the revenue loss for the House plan will grow to $769 million.  Rather than look to find responsible ways to balance those changes or reject the income tax reductions, it appears that policymakers are just looking to slap something together in the waning days of the session.  This is certainly not the way to remake the tax code for the next century.

NC Budget and Tax Center

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

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From his inaugural State of the State speech to interviews just a few weeks ago, NC Governor Pat McCrory has repeatedly proclaimed the critical importance of any tax reform in North Carolina being “revenue neutral.”  Indeed, in the State of the State speech he emphasized the need to protect NC’s vital services – like health care – in any reform.  McCrory is now presented with tax reform plans from the NC House and Senate that far from being “revenue neutral” cut literally billions of dollars from NC’s state budget over the next few years.  How will he react to this challenge to one of his bedrock principles on tax reform?

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NC Budget and Tax Center

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

NC Budget and Tax Center

The Senate’s historically unprecedented $1 billion-a-year tax cut passed out of the Finance Committee yesterday, moving steep reductions in personal income tax rates and outright elimination of the corporate income tax one step closer to becoming law.  While legislative leaders spoke glowingly about reducing North Carolina’s income tax rates to below those in other southeastern states, they remained conspicuously silent on how those other states have dealt with keeping their own income taxes so low–by increasing property taxes or sales taxes (or both).

This raises an important question—will North Carolina’s state income tax cuts simply lead to higher property taxes and sales taxes?

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