With the 2013 tax cuts, every North Carolinian sees a reduction in their personal income rate, which goes to a flat rate – 5.8% in 2014; 5.75% in 2015. Low and middle income households get a $300 Million tax cut.
With the 2011 sales tax rate decline (from 5.75% to 4.75%), households earning less than $100,00 a year have seen $400 Million savings per year while those making more than $100k have seen $178 M savings per year. In other words, those with lower incomes got more than twice as much benefit as those with higher incomes. It is interesting to note that Republicans pushed for the sales tax reduction while Democrats fought tooth and nail to keep the 5.75% rate in place.
Combining the 2011 and 2013 tax changes. Low and middle-income earners will see $682 Million in tax savings every year.
As with any tax cut, those who earn more and spend more will realize greater savings. At the low end, those earning $12,500 a year will see a tax cut of $135 while at the high end of $288,000 income earners will see a tax cut of $3,600 – both about a one percent cut. The savings across all income groups range from one-half to one-percent.
In the aggregate, every income group from the lowest to the highest will end up with lower bills at the cash register and enjoy increased take-home pay.
Although there may be a few outliers who will see increases in their total tax bill, empirical research tells us the overall impact to the economy will make North Carolina a more attractive haven for investors and job-creators, spurring economic growth, ensuring long term fiscal viability and benefiting every North Carolinian.
