My thanks to N.C. House Minority Leader Darren Jackson, D-Wake, who tweeted the apparent source of the governor’s remarks.
Here are the numbers based on actual tax filings. A single person making 1 million/yr saves $8,226. a family making 25k saves $39 pic.twitter.com/fd6WXb8QwA
— Darren Jackson (@DarrenJNC) June 21, 2017
The Office of State Budget and Management estimates that single taxpayers earning $1 million or more would save $8,226 from the personal income tax changes. OSBM estimates that married couples earning between $10,000 and $25,000 would save $39. Jackson emphasizes these two numbers in his tweet, though it’s not clear that Gov. Cooper is using these two numbers, since one figure is 210 times as large as the other.
A quick perusal of the chart doesn’t indicate a relationship between the $8,226 figure and a figure that’s 85 times smaller. Even the next income group in the married couple chart, those earning between $25,000 and $50,000, would save $163. The $8,226 figure is 50 times larger than $163.
More important, this chart distorts the impact for particular families. A married couple earning $1 million would see a tax break of $2,557. A single taxpayer at that income level would see a slightly smaller break of $2,533. If the expected impact of the tax changes is an $8,226 average tax break for single taxpayers earning “$1 million or more,” most of them must be making a heck of a lot more than $1 million.
The chart also says nothing about the amount of personal income taxes the taxpayers face under current state law, and the amount they would continue to pay after the changes.
Since Rep. Jackson referenced the $39 figure, let’s revisit the impact of the new tax changes on a married couple earning $25,000. As we learned yesterday, the tax break for a couple at that income level is $150. (Remember that there’s no change for couples making up to $17,500, who owed no state income tax. Those at $20,000 see savings of $137 as their state personal income tax liability drops to zero.)
For a taxpayer to secure a personal income tax break 85 times as large as $150, the break would have to be $12,750. How much would a taxpayer have to earn to secure that large of a tax break? Nearly $5.1 million.
Keep in mind that the tax bill for that taxpayer will have dropped from $278,676 to $265,926. That’s less than 5 percent of the taxpayer’s personal income tax burden. And, even after getting a tax break 85 times as large as that earned by the $25,000 household, the bill still will be more than 1,000 times as large as the $262 the $25,000 household will owe.
(Joe Coletti has put together some great graphics on these tax issues.)