The John Locke Foundation has released a new report showing that recent tax reforms in North Carolina benefit all individuals and families, regardless of income:
Taxpayers in every income category will save tens of millions of dollars because of state tax reforms enacted in North Carolina in 2013. Combining 2013 reforms with a 2011 sales-tax decline pushed by the Republican-led General Assembly, lower- and middle-income households will enjoy annual savings of $682 million, according to a new John Locke Foundation Spotlight report.
“It’s simply false to claim that recent tax changes in North Carolina are allowing the well-to-do to get their taxes reduced ‘on the backs of’ lower- and middle-income groups,” said Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar. “The average household in every income group from top to bottom is seeing its tax burden reduced from the 2013 tax reform package. Just as important, this new round of tax relief follows a 2011 state sales-tax rate reduction that overwhelmingly favored lower- and middle-income taxpayers.”
JLF President John Hood also writes on the benefits of the tax reform package:
Tax reform typically involves trading in special tax breaks to get lower overall tax rates. Successful tax reforms are structured so that most people are made better off, not just immediately with more disposable income but also over time as more-efficient taxes allow for higher rates of job creation and income growth.
North Carolina’s 2013 tax package fits this definition of successful tax reform. A new study of its effects, published by the John Locke Foundation with the assistance of the Massachusetts-based Beacon Hill Institute, shows that the average household at every income level will pay lower state taxes in 2014 and beyond than they would otherwise have paid.
The total tax burden will drop by about $150 million a year for households with incomes below $50,000. For those with incomes between $50,000 and $100,000, the net tax savings will approach $140 million a year. Upper-middle-income and wealthy taxpayers will get significant tax relief, as well, reflecting the fact that they were previously paying the highest marginal income tax rate, 7.75 percent, which will drop two full points to the new flat rate of 5.75 percent.