A taxing situation

by | Feb 13, 2015 | Editor's Blog, Tax Reform | 13 comments

Ever since they passed “tax reform,” Republicans in North Carolina have been bragging about giving everyone in the state a tax cut. It’s not really true and, more significantly, nobody believes them. Now, most people are going to see a smaller tax refund, too.

In reality, the GOP gave a huge tax cut to the wealthy and big corporations and offered very little to the middle class and working poor. Their plan shifted income taxes to a flat rate of 5.8% from a progressive three-tiered system with rates of 7.75%, 7% and 6%. To put that in perspective, people making the median income of about $45,000 per year saved about $90 a year from the change, not enough to notice, while people making $250,000 saved abut $7,500 a year. To offset the loss of income, the legislature started taxing things like hair cuts and movies, disproportionately hurting the families who desperately need more money in their pockets following the Great Recession.

So it’s no wonder that on a recent poll, 82% of the respondents said that state taxes have either increased or stayed the same. When people get their significantly smaller tax refund checks, that perception may get even worse. The GOP can crow about lower taxes all they want but if people aren’t feeling the impact, their claims aren’t believable.

The GOP gas tax fix is another regressive tax. They’ll get away with that one in large part because of the low gas prices we’re paying. After paying almost $5.00 a gallon just a few years ago, people aren’t likely to notice the bump as long as prices stay under $3.50 or so.

Cumulatively, though, the Republicans have shoveled more taxes onto the people who are still struggling to recover and reduced taxes on the people who are thriving. To cover the reduced revenues, they’ve cut per pupil spending in public schools, funding to our university system, oversight of the environment and services to help people who need them the most. They would call it smaller government and a broader tax base.  I call it wrong.

13 Comments

  1. Jerry Swinson

    My NC tax for 2013 was $500. For 2014 I am projected to owe $2,200 with only a minimal increase in income. I guess the General Assembly will vote to tax our social security in the current session. Thanks for nothing, Republicans.

  2. Ernie Thurston

    You bet it’s bad!

    Seniors …. go to hell! Medical expenses, which are deductible on your Federal tax return if you itemize, are no longer deductible on your NC return.

    Truckers …. go to hell! Your mileage and other work-related expenses are no longer deductible on your NC return.

    Large families …. go to hell! Instead of an exemption of $2500 for each child, exemptions have been eliminated. All you get is the flat $15,000 standard deduction (for a married couple). So for a family with 6 children, which in the past got their first $26,000 tax-free, now NC will tax you on all but the $15,000 …. $11,000 more!

    Poor folks, teachers, students, retirees …. you’ve all lost significant tax breaks, thanks to your Republican friends in Raleigh.

    • Apply Liberally

      The really sad thing is that so many voters in those segments (large families, truckers, the poorer, teachers, seniors/retirees) will still vote GOP come 2016. They will not have put 2 + 2 together. Either they will not have paid close enough attention to their taxes, or they will have gullibly swallowed the diversionary and divisive claptrap lobbed their way by conservative TV and talk radio, and just figure it’s the Dems and/or Obama’s fault.

    • Roy O

      Please don’t forget the previously allowed deduction of the first $2000 of your pension… It’s all taxed now at the “flat” rate. For example, your $12000 pension less the $2000 deduction taxed at 6% is $600. Now your entire $12000 is taxed at 5.8%, for a tax of $696. So the advertised tax cut cost you $96 more on your state tax… How generous of our Assembly to give us the opportunity to send them more of our money while telling us they cut our taxes…

  3. Brad

    While doing my taxes this year see that I am eligible for a similar refund for Federal as year before, yet I owe money to NC. Based on same income level, mortgage deduction etc.. $900.00 NC refund from 2013 has turned into a $300.00 additional tax liability for 2014. My state withholding was the same in both years. Still tying to figure out how this “tax reduction” sponsored by our Republican GA has helped me out.

  4. Randy Voller

    A lovely lady who has been our bookkeeper since 2007 came to our office last Thursday and told us that for the first time in memory she is paying taxes to the State of North Carolina. Now keep in mind that she is over 65, works part time, has had her share of health problems, owns a modest home in the Triangle. She is a solid voting member of the middle class and she was shocked and angered by the new tax policies that have shifted the burden onto teh working class and middle class—especially retirees who work a few hours a week to make ends meet.

    • Progressive Wing

      “….65, works part time, has had her share of health problems, owns a modest home in the Triangle. She is a solid voting member of the middle class and she was shocked and angered by the new tax policies that have shifted the burden onto the working class and middle class—especially retirees who work a few hours a week to make ends meet.”

      The above describes me and my reaction to a “t”.

  5. Eilene

    This is the first year that my husband and I owe more money to the state. I’m a teacher and he is an environmental specialist who worked for DENR until October when he found a better job. So, we are well under the “wealthy” label, for sure. I paid quite a bit of money to the state already, and now I owe them more. This just chaps my hide. (Which does not look like it is spelled right, but it’s what the dictionary said… oh well.) How so many people fall for what these crooks are selling is beyond me.

    And Russell… I don’t think I understand your point. What does this have to do with the new tax base for the state?

  6. Hugh Franklin

    Thanks Thomas for the blog, but aren’t you really just observing the fact that it took everyone two years to realize the inevitable? This massive upward transfer of wealth was clear when HB 998 was passed in July 2013 to overhaul an ‘antiquated system’. The republicans never had to justify it in sustained debate, either in the legislature, or the media.

  7. Russell Scott Day

    It is time to call out the CSA that is really our current enemy. The rich and those with land deeds, again the only game going as banks give little in the way of interest steering semi wealthy into the now well rigged stock market so the financial engineers can act as predators on great swaths of people never to be left alone, but to be targets for these predators. The land owners and those collecting deeds now sit in the same positions as those who ended up getting the money after the payola scandals. The regular common DJ no longer got the bucks to play the song, all went to the station managers who threw together a playlist according to the desires of the record companies. Seems an odd story, but is the way it compares. The liberal fictions as champions of the working classes are just that, for if I measure aid to working people in shared infrastructure that the Horace Williams airport in Chapel Hill exposes, we are expected to pay for their private uses as they manage it according to the Big Lie theory. The zoning departments of the towns seem to have taken the place of red lining. Continual touts of the Governor’s office point to jobs and jobs while those Democrats in positions where they might encourage the same or better, don’t show.

  8. Progressive Wing

    And just for the record (and beyond haircuts and movies), the GOP also increased taxes on all our electric bills, and also on most service contracts. All regressive taxes in nature; whether you make $50K or $350K, you’ll pay the same amount of tax on these goods/services….

  9. John Eyles

    Yeah, and they cynically sold the flat rate as “simplifying your taxes”. How stupid do they think people are ? IF you don’t use tax software, and IF your income is too high to look it up in the tax tables (but, despite that, you don’t use an accountant), then yes, the flat tax saves you from having to do one subtraction, one multiplication, and one addition. Which, considering what they’ve done to our school system, maybe that WOULD be a challenge for some.

  10. Betty McGuire

    Republicans take the top prize for smoke and mirrors when it comes to taxes.

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