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If there’s a “most frustrating set of tax facts” to be considered today as this year’s Tax Week comes to a close, it’s got to be this: the billions of dollars that tax scofflaws cheat their fellow citizens out of and the conservative, budget-cutting policies that help enable it.

As Citizens for Tax Justice reported earlier this month:

“All told, American Fortune 500 corporations are avoiding up to$600 billion in U.S. federal income taxes by holding more than $2.1 trillion of “permanently reinvested” profits offshore. In their latest annual financial reports, twenty-eight of these corporations reveal that they have paid an income tax rate of 10 percent or less in countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens”

Meanwhile, billions of tax dollars go uncollected each year from corporate and individual taxpayers, in large measure because of conservative budget cuts at the I.R.S. As former National Association of Manufacturers chief Jerry Jasinowski wrote on the Huffington Post earlier this week:

“For five consecutive years Congress has taken an axe to the IRS budget imposing total budget cuts thus far of $1.2 billion. As a result, the IRS has lost 13,000 employees, 11 percent of the total. Last year, the IRS began 19 percent fewer criminal investigations than the year before. This year the agency expects to close at least 46,000 fewer audits. With 5,000 fewer revenue agents, revenue officers and criminal investigators, the IRS expects at least $2 billion that taxpayers owe to the government will go uncollected in 2015.”

And don’t think North Carolina tax collections are immune to this toxic pattern. The Charlotte Observer reported earlier this week that more than 300,000 people owe more than a $1 billion to North Carolina in delinquent taxes. Noticed any proposals on Jones Street in recent years to meaningfully beef up the state Department of Revenue?

The sad bottom line on all this: It isn’t an accident. The conservative campaign to undermine the legitimacy of public structures by underfunding them and thereby eroding public confidence in (and support for) them has been ongoing for many decades. Here in North Carolina, the war on public education has been the most visible example of this Koch-Pope ideology in action, but the efforts to undermine the agencies that administer and enforce tax collections is another.

We’re all suffering as a result of this disturbing cynicism.

Commentary, NC Budget and Tax Center, Raising the Bar 2015

Raising the Bar in North CarolinaEditor’s note: The following post by Beth Messersmith, NC Campaign Director with MomsRising.org, is the latest installment in “Raising the Bar,” a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved.

This week found my husband and I scrambling to make sure we had all of our I’s dotted and our T’s crossed as we hurried to make sure we had our taxes filed on time.

As he sat watching us from the couch, my almost ten-year old remarked about what a bummer it is to have to pay taxes. His sister stopped doing cartwheels across the living room long enough to agree and opine that she was glad that she didn’t have to pay them out of her allowance.

I guess I shouldn’t have been surprised. Anti-tax rhetoric is everywhere in the weeks leading up to tax day. Just that morning on the way to school the deejay on the morning radio show was talking about how much he hates paying taxes.

But their remarks were enough to make me stop my hunt for receipts and pull the kids onto the couch to talk to them about why —as a parent and a part of this country —I don’t mind paying taxes. In fact, I see it as part of my duty as someone who loves this country and benefits every single day from the investments we make as a society. And why, as a parent, I feel especially grateful for the investments we make in our children.

We started off by talking about their schools and the things that make schools work. They listed off their teachers, their supplies, the buses, even the buildings. Then I asked them who they thought owns our schools and employs our teachers. They’d never really thought about it. Explaining it to them gave me a chance to talk about how taxes are actually investments in our community and, in the case of schools, in the futures of the children who attend them. I shared how I benefited from public schools even before they were born as a student myself, as an employer looking to hire qualified people, and as a community member who benefits from an educated society. Read More

Commentary, NC Budget and Tax Center, Raising the Bar 2015

Editor’s note: The following post by Jeremy Sprinkle, communications director at the NC State AFL-CIO, is the latest installment in “Raising the Bar” — a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved. 

No one wants North Carolina to have a strong economy more than its workers, who want to be able to work and to earn enough to support their families. Our state budget includes vital investments in supporting our current and future workforce, for example through workforce development, re-employment support and early childhood education, and our K-12 public school system. We know that making investments in these areas ultimately benefits all workers, families and our economy.

Unfortunately, legislative leadership in North Carolina has not pursued a path of investing in our workers and future workforce, but instead implemented a costly tax plan passed in 2013 that bleeds the state of much needed revenue for workforce development and training and innovative, proven initiatives that would create good-paying jobs in our state. The plan they passed gave big tax cuts mostly to profitable corporations and individuals at the very top of the income scale. Legislators based the pursuit of this strategy on a theory that tax cuts lead to higher job creation. However prior experience and research tells us that tax cuts don’t create jobs and they don’t grow the economy.

The 2013 tax cuts haven’t fixed the labor market despite disproportionately going to so-called “job creators” – the wealthiest North Carolinians and profitable major corporations.

As billionaire venture capitalist Nick Hanauer has said, if it was true that tax cuts for the rich created jobs, we would be drowning in jobs — but we’re not.

There are more people looking for work today than before the recession, and many of the jobs out there are low-wage jobs that don’t pay enough to support families or to reverse the decline of our middle class.

In fact, adjusting for inflation, an hour’s work today actually buys less than it did in 2007. Another tax cut isn’t going to fix that.

The way to raise wages and fix the labor market is by investing in our workforce and by empowering more workers to engage in collective bargaining to turn low-wage jobs into good jobs.

Policymakers have for too long asked working families to pay more and settle for less.

The 2013 tax cuts for the wealthy forced the state to slash programs that would have helped workers recover from the recession and rebuild their lives.

Workforce development, reemployment services, child care subsidies, and the Earned Income Tax Credit have all been cut or eliminated. Meanwhile, the cost of job training at community colleges or of pursuing a higher education is more expensive than ever.

Workers are consumers, and that makes us the real job creators in our economy. There aren’t enough wealthy people to make up for the declining buying power of North Carolina’s workers, and another tax cut for the rich won’t change that.

If lawmakers want to create jobs, they need to invest in workers, and investment takes revenue, revenue that is lost by cutting taxes.

And if they want to do something meaningful to put more money into workers’ pockets, they’d be better off encouraging workers to form unions and bargain collectively than by doubling down on the failed ideology that tax cuts are some sort of cure-all that past experience and common sense tell us just isn’t true.

 

Commentary

foreclosed house-for Rob(1).jpgHere’s an issue from the current state policy debate that hasn’t gotten nearly enough attention in recent days: the General Assembly’s new plan to tax homeowners who manage to get some of their debt forgiven in order to avoid foreclosure and stay in their homes. Under the new gas tax compromise brokered by the House and Senate and tentatively approved yesterday, the Senate’s original plan to tax these homeowners for the loan forgiveness — something the feds do not do — has been put back in the bill.

As the one state capital journalist who has been doing a consistently solid job of following this issue, Mark Binker of WRAL, reported last week:

“North Carolina has decided to charge taxes on some items that would have gone untaxed due to changes to federal laws. The most controversial change along these lines has to do with mortgage debt that is forgiven.

When someone who is in a financial pinch has the amount they owe on their home forgiven through a debt relief program, that can be counted as income. The federal government decided not to tax this amount, but the state will under the Senate Bill 20.

This change was controversial when the measure passed through the Senate because it levies a big tax bill on those trying to work their way out of debt. When House lawmakers first passed this bill, they excluded the mortgage forgiveness from taxes. The compromise measure takes the Senate position.”

You got that? even as people throughout the state gnash teeth and get hot under the collar about a few pennies on a gallon of gas, many North Carolinians will now quite possibly and unnecessarily lose their homes as the result of new taxes that directly defeat the purpose of public programs that were designed to save them. The move is, in short, a perfect symbol of the shortsighted and regressive approach to tax policy that is one of the signature features of the current state political leadership.

NC Budget and Tax Center

On Wednesday, the Senate Finance committee heard presentations that made the case for more changes to the state’s tax code. While beginning with many of the economic realities in North Carolina—stagnant and falling wages, persistently high poverty, and slow growth— the presentation prescribes the wrong medicine: more cuts to the income tax in favor of applying the sales tax to more goods and services.

It’s a surprising conclusion to reach as prior “reform” efforts based on income tax cuts for the wealthy and profitable corporations have not allowed North Carolina to invest in the state’s economic recovery. It’s even worse with evidence mounting that shifting more of the tax load onto average people is causing real damage.

It’s clear that more tax cuts for the wealthy and profitable corporations aren’t the best tools to address the economic issues highlighted in the presentation. Tax cuts do nothing to address the fact that workers aren’t seeing their wages grow, despite increasing productivity. Tax cuts that primarily benefit the wealthy and profitable corporations do not help alleviate poverty. Instead, such an approach jeopardizes the ability of the state to invest in pathways to opportunity—the schools, research and development, and business start-ups that create a vibrant economy.

We have long advocated for tax reform, and a genuine and thoughtful plan to modernize our tax code is still needed today – not in spite of 2013 tax changes, but because of them. But shifting the state away from the income tax to rely more on sales taxes, as the leadership presented yesterday, will make things worse, not better. It will not help address the ups and downs in revenue collections and will mean that everyday North Carolinians carry more of the tax load while wealthy taxpayers get a tax cut. This is especially true if such tax shifts don’t seek to offset a greater reliance on sales tax with a strong state EITC.

Here is what should be the focus of legislators’ reform efforts: Read More