The tax changes enacted since 2013 have held North Carolina back from critical investments that will strengthen economic opportunity and the economy for the future and failed to address underlying systemic issues in our state economy.
Driven by an ideological commitment to the flawed theory of trickle-down economics, these tax cuts have primarily benefited the richest North Carolinians and large, multi-state profitable corporations.
These tax cuts also made us less resilient in the face of COVID-19 and the pandemic downturn. Yet leaders in the NC General Assembly continue to pursue income tax cuts year after year, including in 2021.
- Tax cuts in North Carolina mean millionaires pay less as a share of their income in state and local taxes than people living with poverty income.
- Tax cuts made in 2013 mean that North Carolina has $5 billion less in revenue than would have been collected if lawmakers had not made these changes to the state tax code.
- These tax cuts also delivered the outsized share of the net tax cut to white taxpayers, doing nothing to address the greater tax load carried by taxpayers of color.
Tax cuts aren’t the tool North Carolina needs to build an economy that works for everyone.
The Pathway to Zero Income Tax
North Carolina’s legislative leaders want to eliminate the income tax and have been working since the massive tax overhaul in 2013 to do just that. With the help of national tax cut proponents Arthur Laffer and Stephen Moore, as well as Americans for Tax Reform, North Carolina leaders have continued to ratchet down the statutory tax rate on personal income and corporate profits.
The current 2021 tax debate would move North Carolina closer to that goal with outright elimination of the corporate income tax by 2028 and a reduction of the personal income tax rate to 3.99 percent.
The public has opposed this path for North Carolina, recognizing that it would shift taxes to everyday North Carolinians while the richest get a break and would likely lead to deeper cuts to public services and institutions.
It’s time to be clear that continued reductions to the corporate and personal income tax rates will hurt, not help, our communities and families.
Check out our MINI-TOOLKIT on taxes that provides an overview of the analyses and tools that the Budget & Tax Center has developed to document the harm of the 2013 tax plan.
Tax Cuts Block NC from Shared Prosperity
Proponents of tax cuts continue to push a mantra of low-income taxes being a major driver of state economic growth. Research and past experience, however, has proven this approach is unlikely to deliver promised economic results. Instead, it can be counterproductive. Investing in K-12 education and colleges, infrastructure projects across the state, and more targeted support for main street and neighborhood revitalization initiatives presents a much better economic development strategy that will help drive the state forward.
For more on the North Carolina economic evidence that tax cuts have not worked to increase economic opportunity or support economic growth check out these reports.
- Corporations over Carolinians
- North Carolina’s Tax Cuts haven’t Caused the Economy to Surge
- Don’t Call it a Comeback