New national report: NC taxes favor the wealthy at the expense of poor and middle class

The Institute on Taxation & Economic Policy is out with its new “Who Pays?” report, which examines what different income groups pay in the way of state and local taxes throughout the country. The media release below from the N.C. Budget and Tax Center summarizes the not terribly surprising (but still powerful) findings in North Carolina.

In North Carolina’s tax system, the poor pay more
A new study shows that the wealthiest North Carolina residents pay a far smaller share of their income than low- and middle-income families

RALEIGH (Nov. 18, 2009) — Low- and middle-income families in North Carolina pay a far higher share of their income in state and local taxes than do the richest families in North Carolina, according to a new study released this morning by the Institute on Taxation & Economic Policy.

“Our reliance on regressive taxes, such as sales and excise taxes, makes sure that North Carolina’s system disproportionately impacts the worst-off families,” said Elaine Mejia, director the NC Justice Center’s Budget & Tax Center. “Broadening the base of the sales tax to include more services and boosting the Earned Income tax Credit for working families would make the tax code fairer and more stable.”

When all North Carolina taxes are totaled up, the study found that:

  • North Carolina families earning less than $17,000-the poorest fifth of North Carolina non-elderly taxpayers-pay 9.5% of their income in North Carolina state and local taxes.
  • Middle-income North Carolina taxpayers-those earning between $29,000 and $48,000-pay 9.6% of their income in North Carolina state and local taxes.
  • But the richest North Carolina taxpayers-with average incomes of $1,150,400-pay only 8.1% of their income in North Carolina state and local taxes.

“North Carolina lawmakers may be forced to make difficult tax and spending decisions in the upcoming year,” said Matthew Gardner, ITEP’s executive director and lead author of the study, titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. “They should be mindful that the North Carolina tax system already falls most heavily on the very poorest families in the state.”

“A system with lower tax rates for the best-off taxpayers is both unfair and unsustainable,” said Mejia. “The very wealthiest individuals contribute less of their total income, on average, than middle- and lower-income taxpayers.”

The full report with national data is available at: http://www.itepnet.org/whopays3.pdf

Individual state fact sheets for this edition of Who Pays?, including the North Carolina fact sheet, are available here: http://www.itepnet.org/whopays.htm

FOR MORE INFORMATION, CONTACT: Elaine Mejia, 919.856.2176; Jeff Shaw, communications director, NC Justice Center, 919.863.2402 (office) 503.551.3615 (mobile); Meg Gary, Budget & Tax Center, 919.856.3192.

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