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Despite Promises From a Decade Ago, NCGOP’s Tax Policies Have Only Increased the Burden on Middle-Income Families

Source: WRAL

For how much Republicans love to talk about supporting hard-working Americans and making sure families have what they need to survive, you might think they’d have policies reflecting those values – but you’d be wrong.

As The News & Observer’s Ned Barnett writes in an editorial, despite Senate leader Phil Berger’s speech back in 2013 calling on senators to think about families “out there struggling to make ends meet,” the resulting NCGOP policies have accomplished the exact opposite.

Since that speech 10 years ago, Republicans have overhauled the state’s tax code by replacing a graduated income tax with a flat tax, began the first steps toward reducing the corporate income tax to zero by 2030 and ended multiple tax credits meant to help working families.

Barnett writes that while the state’s personal income tax rate has dropped from a peak rate of 7.75% to a flat tax of 4.75%, many taxpayers are still paying more in taxes overall because tax credits have been taken away, the sales tax has expanded and property taxes have skyrocketed.

Lower-income earners in North Carolina are now paying a larger share of their income in taxes than those with higher incomes.

One example of the NCGOP’s absurd tax reform efforts dates back to 2013 when they got rid of the estate tax for estates valued at more than $5.25 million – which, as Barnett points out, represented only 23 tax filers in 2012 – while taking away the Earned Income Tax Credit, which helped more than 900,000 working households across the state.

Barnett also highlights the connection between the NCGOP’s actions on tax reductions and the raising of local property taxes. Although the average North Carolinian has seen a reduction in their income taxes, the highest earners are still seeing the largest savings, which has resulted in a lack of state revenue available for expenses such as paying for public schools. When counties don’t have proper funding for their schools, they must find alternative ways to get those funds. Unfortunately for property owners, the way to do that is by raising local property taxes to compensate for the lack of funding provided by the state.

Analysis by the nonprofit NC Budget & Tax Center on behalf of The News & Observer paints a depressing picture of how the NCGOP’s tax policies have affected middle-income families earning between $44,000 and $77,000 – despite what Republicans said their policies would do for these families.

According to the analysis, state income tax cuts resulted in the average household in that income range receiving an extra $1,275 more per year in take-home pay (around $25 a week). If that was the only effect of these tax policies then that would be pretty helpful for a lot of people. 

Unfortunately, that’s not the case. Those same households no longer have a $258 child care tax credit, they now pay $271 per person more in property taxes and they are spending $2,714 in sales tax. But that’s not all – these households are also dealing with an average rise in housing costs of more than $4,500 since 2013 and an astronomical $4,095 increase in child care costs per child. If the legislature would pay more into the state’s affordable housing fund and use the corporate income tax revenue to subsidize child care, that $4,095 per child figure could be reduced.

Fortunately for these families, Gov. Roy Cooper’s proposed budget would address a number of these issues.

The governor’s budget calls for an average 18% raise in teacher pay, the full funding of the Leandro Plan for public schools, tax breaks for middle-class families while not raising taxes on anyone else, investments in job training, the funding of child care stabilization grants, and a halt on the reduction of the state’s corporate income tax, just to name a few things.

The budget would do all of that (and more) while maintaining the state’s reserves at almost $7 billion.

Unfortunately, Republicans have no actual interest in fulfilling promises to North Carolinians that they made a decade ago.

Berger called Cooper’s budget an “irresponsible, unserious proposal from a lame-duck governor who wants future North Carolinians to pick up his tab.”

Barnett closes his editorial with this

“Instead, the Republican plan is to continue passing the tab down the economic ladder to cover basic services while continuing to make tax cuts that mostly benefit the wealthy and major corporations.”

That sounds about right for Republicans.


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