Editorial: Taxing times for Tar Heels
To commemorate Tax Day, we have yet another editorial blasting the "tax reform" scheme passed by Governor McCrory and politicians in Raleigh, which had led to tax hikes for most North Carolinians.
Meanwhile, the Institute on Taxation and Economic Policy reports that in all 50 states, the wealthy tend to pay a lower percentage of their incomes in taxes than low- and middle-income taxpayers.
In North Carolina, the institute reported, a family of non-elderly taxpayers in the bottom 20 percent of income – less than $18,000 a year – paid 9.2 percent of their income in state and local taxes. The 1 percent with the highest incomes – $376,000 and up – paid just 5.3 percent of their income in those taxes.
The institute says states are relying largely on sales taxes, which hit poor and middle-income families especially hard because they spend a bigger chunk of their paychecks on food and consumer goods.
North Carolina lawmakers expanded the reach of state sales taxes while lowering the corporate income tax rate.
They also eliminated the state's earned income tax, which in some cases resulted in cash payments to low-income working families.
North Carolina has joined just seven other states in having a flat tax for all incomes, rather than taxing higher incomes at a higher rate.
Defenders of graduated tax rates say it's only fair to ask the wealthy to pay a higher percentage of their incomes in taxes.
Opponents are just as convinced that flat taxes are fair taxes, and they are in the majority in the N.C. General Assembly.
Republicans say the changes make North Carolina more competitive and have improved the economy while keeping more money in people's pockets.
Some lawmakers in the state House are working to restore a medical deduction, perhaps mindful that senior citizens are a powerful voting bloc.
But for the poor who were hurt by the end of the earned income tax credit and for middle class taxpayers hit by cuts in popular deductions, there's little relief in sight.