North Carolina liberals continue to make the silly claim — the false claim — that fiscal conservatives in the state legislature have put in place a massive tax increase on massive numbers of North Carolinians. Bunk. Taxpayers in every income category will save tens of millions of dollars because of state tax reforms enacted in North Carolina in 2013. In addition to benefits for every income group from last year’s reforms, the conservative-led N.C. General Assembly is also responsible for a 2011 states sales tax rate reduction. Combine the 2011 and 2013 reforms, and lower- and middle-income households will enjoy annual savings of $682 million. I talked about the details of the tax reform package with Dr. Roy Cordato, John Locke Foundation vice president for research and resident scholar. Here’s part of our conversation on a recent edition of Carolina Journal Radio.
Martinez: Pretty fascinating data — very good data. It may surprise some people, Roy, because the media narrative on this tax information has been, well, basically [that] the legislators cut taxes for wealthy people. Not so.
Cordato: Yes. And beyond that, cut taxes for wealthy people on the backs of lower-income people. But, of course, this study, which was done for us by the Beacon Hill Institute at Suffolk University in Boston, shows that the recent tax reforms in 2013 will reduce taxes for all income groups, starting at below $25,000 a year — households below $25,000 a year — all the way on up. All of those households will be paying lower taxes as a result of the 2013 tax reform. And if we include in that … all the tax declines that can be attributed to actions taken by the Republican legislature starting in 2011, that [tax savings] expands even further. And, in fact, it ends up being, if you look at the 2011 … changes to the sales tax, it becomes overwhelmingly favorable to low-income taxpayers because they really got the benefit of that decline from 5.75 percent sales tax to a 4.75 percent sales tax.
Martinez: And yet, Roy, there have been some progressive advocates who continue to criticize, in fact have reacted to the Beacon Hill report and your analysis of it, saying that, “Well, you haven’t factored in everything, and so that’s not really true.” Tell us about that.
Cordato: Well, they’re lying. They’re lying. The fact is — and I’m sure they haven’t looked at the study or, if they have, then it’s particularly egregious — we include the sales tax expansion — in this study — to things like movies, and we include the elimination of the earned income tax credit in this study. And despite those changes, which can be considered tax increases in this reform, overall, because of the decline in the income tax rate, and especially for the dramatic increase in the standard deduction, households in lower-income groups are going to benefit from this. And if they say that we are not including those other things, they’re simply making that up.
And now you know the facts.