To hear Republicans tell it, corporations and the wealthy have been under attack for years. Class warriors have demonized the rich, discouraging people from making money and slowing down our economy. If we would just get government out of the way, let wealthy folks keep more of their money and stop regulating everything, the economy would take off.
So in North Carolina, they’re trying it. So far, it’s not working out so well, at least for most of us. In 2007, the wealthiest in North Carolina paid 6.8% of their income in state and local taxes. The poorest 20% paid 9.5% of their income in state and local taxes. After tax cutting Republicans took control, in 2009 the top 1% was paying 6.5% and the poorest 20% was paying 9.8%. In fact, everybody paid more of their income in state and local taxes except the top 1%. And that’s before the tax laws take effect.
This year, the wealthiest paid 1.7% less in income taxes than they did last year. The poorest lost their earned income tax credit. And increased sales taxes on things like college dining hall meals means an increased tax burden on poor and middle class families. So, the wealthy are now likely paying significantly less than 6% of their income in local and state taxes while the poorest will likely be paying significantly more than 10% of their income. That’s what Republicans call fair.
And what’s the impact? Well, according to the Rockefeller Institute of Government at the State University of New York, North Carolina has seen a 9.7% drop in state tax revenue. Personal income tax revenue dropped by striking 17.9% while sales tax revenue increased by only 4.4%. Only six other states in the country saw such a loss of revenue.
The governor’s budget director, Lee Roberts, says not to worry. It’s too early to make projections yet. So let’s not make projections. Let’s make predictions.
I predict that we will have significantly less revenue than we did last year. I predict that the poor and middle class will pay a greater share of their income in state and local taxes while the wealthiest will pay a lower share. I predict that we’ll see additional cuts to our schools, community colleges and universities and a host of other programs that help poor and middle class families. And, finally, I predict that Pat McCrory and the GOP legislature will tell us that we have to tighten our belts so the rich can loosen theirs.