New report: NC tax policy promotes racial inequities in numerous ways

A new report authored by Alexandra Sirota and Leila Pedersen of the North Carolina Budget & Tax Center analyzes who pays taxes in North Carolina and the ways in which our current tax code directly — and via the investments it supports — impacts Black, Indigenous, Latinx, and white residents.

Its unsurprising conclusion: North Carolina is not measuring up well. This is from the introduction to “State tax policy is not race neutral”:

The COVID-19 crisis has made clear that communities can experience the same events with disparate impacts along the lines of race, ethnicity, and income. Black, Indigenous, and Latinx communities and people with low incomes have been hit hard by the virus; these North Carolinians continue to experience higher death rates, more workplace safety risks, higher job losses, and greater income losses.

The health and economic disparities emerging from the pandemic are a cumulative result of inequities and barriers created by policy choices and a history of racism, bias, and discrimination. Policies and public institutions that limit access to education, quality jobs, and intergenerational wealth for communities of color continue to do harm and fuel racial and economic inequities today.

North Carolina’s tax code and budget are wrought with such policy choices, which can result in racist outcome that worsen barriers to well-being for people and communities of color, according to new data from the Institute on Taxation and Economic Policy (ITEP). The greater tax load carried by Black, Indigenous, and Latinx residents has been exacerbated by state tax policy choices made in 2013, which were layered on historic policy choices that set up a tax code structure that already asked for inequitable contributions from taxpayers of color. By analyzing the impact these policy choices have on different racial and ethnic groups, policymakers could gain clearer insight into the choices that are shaping (and harming) our lives and could make policy choices that advance more equitable outcomes.

This report analyzes the outcomes of who pays taxes in North Carolina and the ways in which our current tax code directly — and via the investments it supports — impacts Black, Indigenous, Latinx, and white residents. Each year, the foundation of our policymaking is often whether and how we will raise collective resources to advance our state’s well-being.

Tax policy, when designed with equity in mind, can support racial justice and sustainable economic growth that delivers broad-based benefits to all. The pandemic has made clear that North Carolina lawmakers can and must make intentional and sound policy choices that respond to the systemic causes of COVID-19’s disparities.

Click here to explore the report.

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