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If the Senate tax plan moves forward, it is very likely that many low- and middle-income taxpayers will see their tax loads increase .

The Senate plan, in addition to the House Plan, do not include the Earned Income Tax Credit, the best tool for ensuring that working low- and middle-income taxpayers are not carrying a heavier tax load than their wealthy neighbors. This decision by Senate and House leadership to end the Earned Income Tax Credit will impact more than 907,000 North Carolinians.

When you look at the Senate plan combined with the end of the state Earned Income Tax Credit and keep in place the local tax on groceries, it’s clear that low-income working families would pay more, while the rich pay less.BTC_Tax Shift Continues_Senate Tax Plan Read More

There are reports that the state Senate and House leadership is working on a compromise tax plan—with the catch, of course, being that many North Carolinians will likely not view the final tax plan as much of compromise, especially in light of how it will probably treat low- and moderate-income taxpayers.

In order to truly be fair to low- and moderate-income taxpayers, the upside-down nature of the state’s tax code must be addressed. But, as our analysis shows, leadership is pursuing tax plans that ignore this principle of equity. They’re also ignoring the important role that the Earned Income Tax Credit (EITC) plays and confusing how the EITC matches up against the standard deduction and a zero tax bracket.

You may recall that at the beginning of session, legislators chose to reduce the state’s EITC—which is a modest but vital support for nearly 907,000 workers earning low wages—and to axe the credit at the end of the 2013 tax year. Read More

In any public policy debate, fact-based analysis is critical. As North Carolina continues to discuss a major overhaul to the state’s tax code, there are numerous analyses that allow lawmakers and the public to see how the Senate tax plan will impact taxpayers and the state.

Here are a few of the best resources and analysis:

In the face of such evidence, lawmakers should scrap the current tax plans and instead look for a way to reform the tax code without hurting middle-class and low-income families and local communities.

It’s hard to know what to make of the news trickling out of the back rooms where House and Senate leaders are working on a tax cut deal. And yes, it’s about cutting taxes now, not reforming the tax code.

House Speaker Thom Tillis told the News & Observer that the two sides must “breach a philosophical divide,” which doesn’t sound like they are close to an agreement.

But the last line of a story by NC Capitol at WRAL.com says that Tillis and Senate President Pro Tem Phil Berger believe a deal could be done this week. That’s not much time for philosophical divide breaching.

There are also whispers in the legislative halls that some folks are pushing for a bare bones budget deal now and a special session on taxes in a few weeks.

The North Carolina House approved a budget last week that would chart the wrong path for North Carolina, according to a new brief released by the N.C. Budget & Tax Center. Similar to their colleagues in the Senate, the House leadership was intent on including tax cuts for the wealthy and profitable corporations in their budget at the expense of everyone else. The result is a budget that falls far short of meeting the needs of children, working families and communities across major budget areas.

In the House tax and budget plan, these tax cuts will cost $528.6 million in lost revenue over the next two years, with the cost ballooning to $651.1 million annually once the plan is fully implemented in the 2018 fiscal year. These figures represent the net tax changes of the House tax plan plus the repeal of the estate tax. Even worse, 95 percent of taxpayers, on average, would see their taxes go up in addition to cuts in vital public services under the House’s formula for “prosperity.” Read More