A left-of-center advocacy group sent a call-to-action email within the past day that includes the following:
Tax reform is needed for North Carolina. Our tax structure has not had a much needed overhaul in many years, and does not respond to the current needs of our state.
But, in reforming our tax system, we need changes that protect the health and financial security of our citizens. The tax reform proposals being debated now in the North Carolina Legislature would not do that and the majority of our state’s residents would pay more taxes. One proposal under consideration would tax Social Security benefits for many people and another proposal added prescription drugs and even groceries to the list of items subject to sales tax.
We don’t think it’s right for tax reform to fall on the shoulders of those who can least afford it. We should share the burden, not give the rich a free ride at the expense of everyone else.
While misleading in a general sense, the passage contains a couple of statements that merit special attention.
First, “the majority of our state’s residents would pay more taxes.” False. Of the House tax plan, John Hood explains, “Republicans and conservatives responded by pointing to a Fiscal Research Division analysis showing that nearly all North Carolina households would receive a net tax cut of some amount from the House bill, even after accounting for an expansion of the sales tax base to some currently untaxed services.” How about the Senate plan? “According to the legislature’s Fiscal Research Division, the new Senate tax bill will reduce taxes for virtually all North Carolina households — poor, wealthy, and in-between.”
The second statement that’s worthy of comment: “We should share the burden, not give the rich a free ride at the expense of everyone else.” The first part of the sentence is unobjectionable. Nor would anyone suggest that the “rich” should get a “free ride.” Do they? It’s hard to see how.
As John Hood documented in his 2012 book Our Best Foot Forward, households among the highest 20 percent of income earners (those with an average income of $195,900) pay federal, state, and local taxes equal to 31 percent of their income. Those in the “upper-middle” 20 percent of earners pay 28 percent of income as taxes. The tax burden continues to drop as you move down the income scale. Those among the lowest 20 percent in household income face a tax burden of 16 percent.
Since high-income earners pay a higher portion of their income in taxes, and since both the House and Senate tax plans would reduce taxes for “virtually all” North Carolina households, there is absolutely no way that the “rich” get any sort of “free ride” at anyone else’s expense. The numbers suggest instead that high-income earners already contribute much in “sharing the burden.”
