RALEIGH (June 13, 2013) — The Senate’s latest tax plan fails to meet the basic principles of tax reform, a new report finds, and in fact represents massive tax cuts that will largely benefit wealthy individuals and profitable corporations and result in more than $1 billion in lost revenue.
By reducing available revenue by $1.3 billion when the plan is fully implemented, the revenue system will not be able to adequately fund core public investments, like public schools, health care, and other services that are needed to ensure the vitality of communities across the state, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. The plan also fails to address the upside down nature of the tax system, the report said, meaning that the revenue system will continue ask the most from those with the least to give, even as the wealthiest pay far less a share of their income.
“Moving forward with the Senate tax plan will leave North Carolina unable to maintain its most important investments, which are the very building blocks of a strong economy and strong future,” said Alexandra Forter Sirota, director of the Budget & Tax Center.
Unlike the first plan released by Senator Berger, the latest Senate plan does not expand the base of the sales tax to as many goods and services. However, it still adopts a flat and lower income tax rate, and adds it to the outright elimination of the corporate income tax, jeopardizing the state’s economic future. Adopting a flat tax rates results in a huge tax cut for wealthy individuals. In the Senate’s latest proposal, 28 percent of the total income tax cut goes to the top 1 percent who have incomes of $940,000 on average.
The Senate plan also eliminates the corporate income, resulting in a loss of more than $1.2 billion in revenue upon complete elimination. Eliminating the state corporate income tax is unlikely to lead businesses to create more jobs or expand their operations because state corporate income taxes represent a very small amount of total business costs. In addition, businesses care about, and rely on an educated and skilled workforce, quality infrastructure and transportation networks, and an attractive quality of life for their employees, among other things.
“The Senate tax plan is not tax reform but instead a proposal to cut taxes for the wealthy and profitable corporations and lower core public services in communities across the state,” Sirota said. “The implementation of this plan will undermine the foundations for economic growth and fail to deliver its promised return of jobs and improved economic outcomes.”
The Budget & Tax Center's new report can be found at this link.
FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, Alexandra@ncjustice.org, 919.861.1468; Jeff Shaw, Director of Communications, email@example.com, 503.551.3615 (cell).