Republican approach to Bush tax cuts would cause higher taxes for North Carolina's middle class and working families
A new report comparing federal tax ideas shows that President Obama's approach would lower taxes on vast majority of NC households, while GOP approach would raise taxes on all but the very rich
WASHINGTON, D.C. (April 22, 2010) -- Extending George W. Bush's tax cuts for the richest Americans, as Congressional Republicans favor, would result in most North Carolinians paying more taxes, according to a report released today by Citizens for Tax Justice.
With both the Bush tax cuts and President Obama's expansions of certain parts of those cuts set to expire at the end of 2010, the decisions Congress makes in the coming months will have very different effects on North Carolinians at different income levels.
President Obama and Congressional Republicans agree that the tax cuts enacted under President Bush should be made permanent for 98 percent of taxpayers. But beyond this, they have mapped out dramatically different approaches.
The report shows that low- and middle-income North Carolinians will pay higher taxes under the Republican approach than under President Obama's approach. It also shows that the richest one percent of North Carolinians will pay far less under the Republican approach than under President Obama's approach. Specifically:
- Under the Republican approach, the bottom 60 percent of North Carolina taxpayers would pay $167 more in 2011, on average, than they would under President Obama's approach.
- Under the Republican approach, the richest one percent of North Carolina taxpayers would pay $33,644 less in 2011, on average, than they would under President Obama's approach.
- Under the Republican approach, the richest one percent of North Carolina taxpayers would receive 30.0 percent of the total tax cuts going to the state in 2011.
President Obama's approach favors allowing most of the Bush income tax cuts to expire as scheduled at the end of 2010 for the richest two percent, whereas Republicans have made clear that they want to make them all permanent.
President Obama would only partially make permanent the Bush cut in the estate tax (meaning he would cut the estate tax in half rather than repeal it altogether as Bush did) whereas Republicans generally support making the estate tax repeal permanent.
As a result, the richest North Carolinians would pay far less under the Republican approach because they would continue to benefit from the Bush income tax cuts and estate tax repeal.
The other differences come from President Obama's modifications of the Bush tax cuts.
The Bush tax cuts enacted in 2001 also included some provisions that help low- and middle-income families through changes to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). President Obama expanded these provisions in last year's recovery act and his budget proposal for next year includes a plan to make the CTC and EITC expansions permanent.
Congressional Republicans have made it clear that they generally support allowing these provisions to expire as scheduled at the end of 2010 (even though they would make permanent all the tax cuts enacted during Bush's presidency).
As a result, many working class families in North Carolina would pay more in 2011 under the Republican approach because they would lose the latest improvements in the Child Tax Credit and EITC.
"Putting more money in the hands of working families is the best way to build a strong economy that works for everyone," said Elaine Mejia, director of the NC Justice Center's Budget & Tax Center. "The EITC is a powerful tool that helps working families earn their fair share, and expansion of this common-sense tool is more appropriate now than ever."
FOR MORE INFORMATION, CONTACT: Elaine Mejia, 919.856.2176; Jeff Shaw, director of communications, NC Justice Center, 919.863.2402 (office) 503.551.3615 (mobile).