JUST RELEASED: The Final Tax Plan
The 2013 tax plan went into effect on January 1, 2014. Within months, working North Carolinians received the state EITC for the last time and official revenue projections were adjusted to reflect the greater cost of these tax changes that primarily benefit wealthy taxpayers and big, profitable corporations.
As the tax plan continues to create challenges for North Carolina to get ahead, the Budget & Tax Center is documenting the impact and connecting the dots between the tax cuts passed and state budget decisions and economic outcomes.
Check out our research on the 2013 Tax Plan including the complete BTC Report and get the word out: the tax cuts will hold North Carolina back.
IN FOCUS: Lessons from Kansas
Kansas’ economic performance has failed to live up to the promises made by Governor Brownback and his legislative allies. Kansas passed huge income tax cuts in 2012 that reduced annual revenue for public investments by more than $800 million for FY 2014. Proponents claimed the tax cuts would boost the state’s economy.
Instead, massive revenue loss has meant continued state funding cuts to core public investments – public schools, colleges and universities, and healthcare services. The state added jobs more slowly than the U.S. as a whole since the tax cuts took effect. Furthermore, average earnings for Kansans are lower in the wake of the tax cuts than prior to the tax cuts taking effect.
For more on lessons from Kansas, see this CBPP report.
ABOUT OUR STATE REVENUE WORK
North Carolina’s revenue system funds investments in the public structures—schools, courts, hospitals, colleges, universities, and infrastructure—that are critical to building and preserving a strong middle class and a 21st century economy. It is not just important that North Carolina have adequate resources to make these investments but how that revenue is raised is important too. The Budget and Tax Center produces research on state and federal tax policies with a focus on how they support economic opportunity and shared prosperity in North Carolina’s communities.
As revenue modernization once again becomes a major topic of debate in North Carolina, it is critical that proposals and ideas are measured against the following principles:
- Equity – How much a family or business contributes in taxes should be based on its ability to pay. The wealthiest should contribute a greater share of their incomes in taxes than those who are low- or middle-income.
- Adequacy – The revenue system should be able to keep up with the needs of the state. Population growth and changes in demographics often cause increased economic activity and greater demand for public services and better infrastructure. The revenue system should grow with the economy so state government can meet those needs.
- Stability – The revenue system should not overreact to changes in the economy and policies, like strong Rainy Day Funds, should be in place to smooth the availability of revenue in difficult times.