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NC Budget and Tax Center

More than 1 million jobless workers were deserted by lawmakers who failed to extend the federal unemployment benefits program that expired in late December. This came three weeks after the Congressional Budget Office concluded that extending emergency unemployment compensation through the end of 2014 would positively impact economic growth and job creation in the short term. Despite this report, conservative members of the US Senate blocked efforts yesterday to extend unemployment insurance at a time when long-term unemployment is at record high-levels.

To no surprise, conservatives are insisting that the extension of benefits be paid for by cuts in other programs, including those that offer support to low-income and jobless families. In exchange for their vote, some conservative Senators want to bar immigrant families from claiming the Child Tax Credit—a measure known as the Ayotte Amendment. This tactic is misguided and counterproductive. Read More

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The N.C. Education Lottery had an unusual sales pitch today, telling players that hitting it big in 2014 will mean less taxes and more winnings

In a tweet sent out this afternoon, the official state lottery Twitter account pointed out that the state’s new flat 5.8 percent income tax, which eliminated a progressive tax structure where the poorest pay a lower percentage of income taxes than those with higher incomes, is a bonus for lottery winners.

lotterytweet

The tweet links to two news releases put out by the state-run lottery that showcases how a Rocky Mount man with a $1 million Powerball ticket and a firefighter in the western part of the state are paying $7,000 to $12,000 less in income taxes in 2014 than they would have if they won in 2013.

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NC Budget and Tax Center

Recent news reports highlight that not all taxpayers will benefit from the tax plan signed into law by Gov. McCrory last year. While disputed, this has been a major talking point for proponents of the tax plan – that all taxpayers will benefit from the income tax rate cuts. The General Assembly’s Fiscal Research Division discredited this claim last month, however, noting that the tax plan creates winners and losers and that some taxpayers will pay more in income taxes.

News reports note that proponents are now backing away from this false claim. A fact check by the Associated Press (AP) concludes that while the state’s income tax rate goes down for every taxpayer, this does not mean all taxpayers will actually pay less in overall state taxes. In response to AP’s findings, Gov. McCrory’s office responded that the governor did not say “every” or “all” taxpayer(s) would see more money in their paychecks as a result of the tax plan. State budget director Art Pope points to a temporary one penny sales tax that expired two years ago to downplay the fact that some taxpayers – particularly low-income families with children – will pay more taxes under the tax plan. BTC’s analysis of the tax plan takes into account the expiration of the one penny sales tax as well as the decision by state policymakers to also let the surcharge on high-income taxpayers expire. Implications from the tax plan have been reported in other news outlets as well (see here, here and here). Read More

NC Budget and Tax Center

The tax bill signed into law this year is fiscally irresponsible and bad for our state, but lawmakers could improve the situation by repealing part of the corporate income tax cut and paying for the rest by closing ineffective tax breaks that only benefit certain companies.

The corporate income tax cuts in the final tax plan are one of the biggest reasons why the state will have less revenue to invest in our roads, schools, and communities. The tax plan cuts the corporate income tax rate to 5 percent by 2015, from the current rate of 6.9 percent, and will reduce annual tax revenue by around $217.9 million in fiscal year 2014-2015 alone.

Meanwhile, the tax plan does little to rid the state’s tax code of costly and wasteful tax breaks that only help certain corporations or industries. Read More

NC Budget and Tax Center

The tax plan signed by Gov. McCrory includes huge tax cuts for profitable corporations that are unlikely to boost economic growth in the state and will reduce revenue for investment in our public schools, healthcare services for the elderly, and other important public investments.

By 2015, the corporate income tax rate is cut to 5 percent from the current rate of 6.9 percent and will reduce annual tax revenue by around $217.9 million in fiscal year 2014-2015. The corporate income tax rate is cut even further in future years if revenue meets a certain target – which is actually below existing revenue projections – and would reduce annual revenue by more than $423 million. These benefits will flow to less than 10 percent of North Carolina businesses. Read More