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Claims about top income tax rates are hogwash

The House tax package includes $267.7 additional revenue from tax increases on high-income earners. More specifically, the House plan would tax household income between $200,000 and $500,000 at a rate of 8.25% and household income above $500,000 at a rate of 8.5%. As expected, some are claiming that these rates will make North Carolina less attractive to wealthy residents, both current and potential. The best evidence countering these claims can be found right here at home by examining North Carolina’s experience following the 2001 tax package that also raised income taxes on higher-income earners. Everyone knows that North Carolina’s population has been growing rapidly, increasing by 17% since 2000. But the NC Budget & Tax Center has taken this analysis one step further and looked at IRS and Census data that shows the incomes of those who have moved to the Tar Heel state in recent years compared to the incomes of those who have moved out of the state. During the period from 2001-02 to 2006-07, a period during which North Carolina had a higher top income tax rate than it currently does, the average income of the households that moved to NC was $1,512 higher than the incomes of those who moved away. During the same period, NC gained $11 billion in taxable income and 204,000 households, on net, as a result of moves between states. Moreover, during this period North Carolina ranked 3rd in the US in households gained versus households lost and 3rd in net taxable income gained as a result of moves between states. For those of you who need to see this trend in a clear picture, here you go:

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