If you go to the General Assembly website to read the details of the much-ballyhooed compromise tax bill – House Bill 998 – you will see that the short title is Tax Reduction Act.
At least in that one small way, legislative leaders are finally being honest. The tax scheme deal announced Monday by House Speaker Thom Tillis, Senate President Pro Tem Phil Berger and a breathless Governor Pat McCrory, no doubt fresh from his imaginary treks into the Moral Monday protests, is simply a big tax cut for corporations and the wealthy.
Despite the claims to the contrary by McCrory and his partners in rewarding the rich and powerful, the plan is not reform at all. It is indeed a tax reduction act, and the folks getting the real reduction are the millionaires while thousands of working families will pay higher taxes partially because the plan eliminates the state Earned Income Tax Credit.
In fact, the N.C. Budget & Tax Center reports that when you take into account the end of the state EITC that currently helps low-wage workers, the bottom 80 percent of taxpayers will see an increase in their taxes on average thanks to the tax “reduction” act.
Call it a tax shift or a tax cut for a few if you’d like. But it’s not reform in any sense of the word, no matter how times legislative leaders claim otherwise.
McCrory’s support of the plan also breaks a promise (a trend lately) that he made during the campaign and in his State of the State Address in February, that any tax package would be revenue neutral. But the tax giveaway to the wealthy will cost the state $600 million a year when fully implemented—a long way from revenue neutrality.
That’s a big new hole in the state budget after several years of slashing funding for education and human services. Just a few days ago, Senator Jerry Tillman told a reporter that lawmakers didn’t have enough money to fund all the state’s education needs. Just wait until the tax cut for the wealthy kicks in Senator. You think times are tight now.
McCrory and supporters of the great tax shift in the General Assembly – who startlingly cut off debate on the House floor Tuesday after less than 30 minutes – said repeatedly that the tax scheme that cuts personal and corporate income taxes would create all sorts of jobs in North Carolina.
But that’s not what senior economists told lawmakers when they appeared before the Senate Finance Committee a few weeks ago. They said there’s no consensus that reducing the taxes would create new jobs. One of them is even affiliated with Raleigh’s leading conservative think tank.
Another economist, a recent college graduate with the right-wing Tax Foundation in Washington who was flown down to Raleigh to beat the tax cut drum, said exactly what the tax shifters wanted him to say and they have been repeating his false and misleading mantra about job creation ever since.
Another favorite talking point also comes from the Tax Foundation, that the tax shift will dramatically improve the state’s business climate ranking compiled by you guessed it, the Tax Foundation, which created the ranking system to support its philosophical agenda of lowering taxes.
Interestingly, no one ever mentions that another Tax Foundation economist said in a debate in Raleigh earlier this year that she supported the state Earned Income Tax Credit, the one that the Tax Foundation worshippers in the General Assembly just eliminated.
That would be the state EITC that helped 64,000 military families in the state last year.
Add it all up, and what you have in the Tax Reduction Act is not reform or even a few needed changes to the state’s revenue system.
What you have at its core is an Art Pope and tea party inspired Robin Hood in reverse tax giveaway crafted to give huge breaks to the one percent while making low and moderate income families pay more, while forcing future lawmakers to dismantle more of the public schools and other vital public institutions the right-wingers now in charge loathe.
It’s not a tax bill at all. It is the latest act in a dangerous ideological crusade. And it was the plan from the beginning.
Fitzsimon is the executive director of NC Policy Watch.