At least the rich got a tax cutWritten by Admin
To the Editor:
Congratulation, the Republican legislature just gave everyone in the state a tax cut. Well, maybe not, just those whose income is over $84,000. If your income is over $400,000, your tax cut may be as much as $10,000. More great news if you are a major corporation, you tax rate was cut substantially. Of course, if you are a small business, you probably will see your overall tax bill go up.
In fact, two out of every three dollars in tax cuts dollars will go to the top 1 percent of North Carolina’s wealthiest citizens. But 80 percent of North Carolina citizens will pay more in taxes under this new budget.
In essence, the Republicans have replaced a progressive income tax system with a flat tax. A flat tax, by its nature, is a very regressive tax. In simple terms the wealthy pay less and the lower and middle class pay more in taxes as a percentage of their income. In case their intention was not clear enough, they eliminated significant tax credits and exemptions that primarily impacted those in the lower income levels.
Here are just two examples: the Republicans eliminated the Earned Income Tax Credit that was implemented to help low-wage workers. Their taxes will now go up significantly. Retirees will lose both a $4,000 deduction for government retirement income and a $2,000 deduction for private retirement income. But the wealthy still get a $1,500 cap on sales tax for their corporate jet or new yacht.
When asked why this change in the tax code, one answer given is that it will be fairer. Is it fairer to the 80 percent who will pay more?
But the reason most often cited is that this business-friendly budget will bring in new business, create jobs and stimulate the economy. No matter how much Tea Party types advocate this discredited policy, study after study has proven that more money given to the wealthy in tax cuts does not mean more money in your pocket.
CEOs say they are looking for world-class schools, a robust health care system, strong middle-class economics, modern infrastructure, and a culture that promotes upward mobility, not one that creates a permanent under class.
The real losers in this budget are the citizens of North Carolina. The General Assembly’s own Fiscal Research Division estimates this budget will cost the state at least $1 billion a year when the changes take effect.
If the Tea Party Republicans are out to destroy state government, this is a good start.