People who are poor pay a greater percentage of their income in taxes than do those who are wealthy. The NC Council of Churches joined many allied organizations two years ago in opposing changes to the state’s tax structure that made it more regressive by, among other things, eliminating higher income tax brackets for wealthier people. Now there’s a report out confirming the impact of those changes. The following is from Alexandra Forter Sirota with the NC Budget and Tax Center, part of the NC Justice Center:
The latest Who Pays? report released today by the Institute on Taxation and Economic Policy (ITEP) takes a look at who pays what in state tax systems across the country. For North Carolina, the lowest 20 percent of North Carolinians – with an average income of $10,700 – pay 9.2 percent of their income in state and local taxes, the report highlights, compared to 5.3 percent for the top 1 percent, the average income for this group is $969,100.
How North Carolina taxes residents matters for many reasons. The state’s upside-down tax system not only contributes to widening income inequality in the short term, but also leaves the state struggling to raise adequate revenue for public investments in the long term, the ITEP report notes. These realities are already playing out in North Carolina.
North Carolina has moved away from many features that create a fairer tax system. These changes have resulted in a self-imposed revenue challenge that increasingly threatens the state’s ability to adequately fund basic public obligations such as education and healthcare services for the elderly and poor. Returning to a graduated income tax rate structure, reestablishing a state Earned Income Tax Credit, and stopping further tax cuts that largely benefit the wealthy and profitable corporations are important opportunities to create a fairer state tax code.
A state tax code that works for all North Carolina taxpayers is important for ensuring that economic opportunity and prosperity is broadly shared. The Who Pays? report makes clear the first order of business as policymakers return to Raleigh today for the first day of the 2015 legislative session is to make sure our state’s tax system is able to raise the revenue needed to support public services without asking more from those with the lowest incomes.
Tax justice is also a moral issue for people of faith. This point is made in a 2013 Council publication entitled From Jerusalem to Jericho: Christian Witness on the Tax-Sustained Road. Click here to download. This relevant resource looks at scripture, theological writings, and denominational statements to make the faith-based case for non-regressive taxation which raises adequate funding for needed state services.
I hope you’ll read “Who Pays?” and then “Jerusalem to Jericho”.