As North Carolina looks to chart a path forward and out of the pandemic’s damaging impacts on people, communities, and the economy, tax policy choices will matter to building toward a more inclusive economy.
To ensure a just recovery, we must fix our upside-down tax code and ensure that everyone can thrive, not just a wealthy few.
Signs are clear that our state’s current trajectory in this recovery will leave incomes even more consolidated at the top. A select few were insulated from the brunt of the public health and economic damage — those able to stay home and stay on the job. Many corporations have reaped record profits.
Growing income inequality and the inequitable impacts from the pandemic would block progress for us all in securing a strong, inclusive economy. All the while, hardship has deepened and people across the state continue to struggle to put food on the table and a roof over their heads.
The reality is that the only way to make sure the recovery doesn’t deepen inequities is if our leaders make policy choices that ensure every person can connect to opportunity — and fix a rigged system so the the rich and powerful don’t continue to receive outsized benefits.
Senate Bill 710 and House Bill 556 provide a first step in addressing North Carolina’s need for a tax code that addresses inequities and enables public investments proven to support economic well-being.
These bills would simply put in place a graduated income tax rate — taxing income above $500,000 a year at higher rates up to the state constitutional cap of 7 percent, and putting us in line with neighboring states by raising the tax rate on corporate profits from 2.5 percent to 5 percent.
It is a wildly popular move. North Carolinians want to see the very rich and big companies contribute to the public good.
These bills wouldn’t undo all of the tax cuts that went to the very wealthy in 2013. They would, however, give North Carolina the opportunity to make up some of the lost ground from years of budgeting without regard to our state’s needs or the well-being of people. They would make it more likely that every North Carolinian has a chance to recover from the range of harms in the past year.
Everyone should have access to educational opportunities, health care, and economic well–being. A $2 billion increase in investments would make it possible for North Carolina to:
- Provide all teachers a 15% pay raise, fund all instructional support personnel at industry-recommended levels, and deliver universal meals to K-12 students;
- Build the affordable housing missing in communities across the state and ensure that housing costs aren’t a cost burden to households with low incomes;
- Deliver quality health care in every community and strengthen the network of public health institutions that inform the public of health risks and support healthy living
North Carolina’s current tax code asks the top to pay less as a share of their income than taxpayers with poverty-level incomes. By putting in place tax policies that would ask just 1 percent of North Carolinians to pay slightly more, North Carolina can invest in a more equitable, just recovery for everyone.
Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center.