NC’s tax reform is flushing families, 4/16/14

Talk about putting lipstick on a pig. Did you guys see Art Pope’s article from 4/16? “NC tax reform and flusher families” at http://www.newsobserver.com/2014/04/15/3786740/art-pope-nc-tax-reform-working.html. I completely disagree with most of his claims. My title would be “NC’s tax overhaul is flushing families!”. NC Budget and Tax Center has the truth about the new tax code.

In the article, Pope is claiming “Our tax code is now simpler, more uniform and fairer for everyone.” But NC Budget and Tax Center (BTC) calculations must be looking at a different population sample in concentrating on low and middle wage earners. BTC calculates that low income workers are paying about 9.5% of their income as taxes. Rich people (making over $345,000), are paying about 5.5%. This means low wage workers will pay more of their income out as taxes and start paying taxes on less income.

Under the old tax code, a family of four would begin paying income tax after $23,400. Under the new tax code passed in 2013, that same family begins paying income tax after $19,400. A little bit of money goes a long way when a person or a family is barely getting by (at or below poverty level).

Pope complains that “legislative Republicans have been criticized for essentially raising taxes by ending the state’s Earned Income Tax Credit.” As well they should be! The EITC helped almost a million low income families this year. Although the state EITC is small, that money goes back to the local economy, unlike extra money saved by the wealthy.

I remember February 2013 when the NC House approved elimination of the EITC the day before a committee discussed abolishing the inheritance tax on the superrich (only affects estates over $5.25 million)! The inheritance tax brought in over $50 million a year, which could have supported the EITC for 450,000 tax payers, according to Democracy NC’s 2013 legislative report card. NC is the ONLY state to repeal the EITC in 30 years. And the state that had repealed it reinstated it soon after.

Pope wrote, “everyone in North Carolina is benefiting from the tax reforms.” However, the NC Budget and Tax Center estimates that the tax changes made in 2013 amount to a tax shift in which the bottom 80% of taxpayers will pay more on average. The bottom 95% of senior taxpayers will pay more as well. Did you know that pensions will be taxed starting 2014? And the tax changes eliminated personal and senior exemptions too.

NC needs to pursue real tax reform in a way that strengthens our economy, instead of holding it back. It’s time to reinstate the state Earned Income Tax Credit and reclaim some of the $1.4 billion in tax cuts McCrory and legislative leaders gave to wealthy people and profitable corporations and use it for our hardworking teachers (mostly women), schools, and displaced homemaker programs, among other things.

State lawmakers could fix the devastating tax changes they made last year during the Short Session, which begins in May.

-Gailya Paliga
President, NC National Organization for Women

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