RALEIGH (January 21, 2015) – A proposal to eliminate North Carolina’s taxation of profits from selling artwork, vacation homes and other high-end items that relatively few own would benefit the wealthiest at everyone else’s expense, a new report from the Budget & Tax Center shows.
This push for capital gains tax breaks is part of a larger effort to radically alter North Carolina’s tax system, to the detriment of the state and its residents.
“At a time when so many families struggle to make ends meet and the state is cutting support for schools and other essential job-creation tools, we shouldn’t back away from calling on the wealthiest to pay their fair share,” said Cedric Johnson, a policy analyst with the Budget & Tax Center, a project of the NC Justice Center, and author of the report. “Now is the time to make sure we support schools, community colleges and universities so everyone has the chance to get ahead.”
The proposed capital gains tax break comes on the heels of 2013 tax changes that shifted the responsibility of paying for schools, health care and other public investments further away from the wealthy and profitable corporations and on to everyday North Carolinians. The cost of that tax plan is sizable, with state revenue projected to be reduced by as much as $1.1 billion for the current fiscal year. Eliminating capital gains from state income tax would reduce annual state revenue by an additional $520 million, meaning even less revenue for public investments that promote economic growth.
There is no reason to believe that cutting capital gains taxes will help the state’s economy. Cuts in the federal capital gains rate have not promoted growth, the report said, nor is there any apparent cause-and-effect relationship between changes in the top capital gains tax rate and savings, investment, or productivity growth. Capital gains tax breaks are even less likely to promote investment, job creation or economic growth at the state level in part as investors will not be more likely to steer money toward companies in the Tar Heel State because investors would receive the tax cut whether they invest locally or elsewhere.
“As some state lawmakers and outside groups push for capital gains tax breaks in North Carolina, several states are moving in the opposite direction and strengthening their capital gains tax because they recognize these tax breaks are ineffective at creating jobs and spurring economic growth, and are unfair to the vast majority of their citizens,” Johnson said. “State policymakers should reject calls to eliminate or cut capital gains taxes and instead work to make sure the wealthiest North Carolinians and large corporations pay their fair share. Bigger tax breaks for the rich while we reduce support for what really creates jobs and makes families secure is a bad investment in our state’s future.”
Read the full report at this link: https://www.ncjustice.org/publications/a-capital-loss-eliminating-taxes-on-capital-gains-would-make-north-carolinas-tax-system-more-unfair/
FOR MORE INFORMATION CONTACT: Cedric Johnson, firstname.lastname@example.org, 919.856.3192; Jeff Shaw, email@example.com, 503.551.3615 (cell).