NC Tax Code Double Taxes Poor & Middle Class

Study: NC Tax Policy hurts Poor


North Carolinians in lower income tax brackets pay a higher percentage of their income in state and local taxes than the wealthiest taxpayers in the state, according to a study by the Institute for Taxation and Economic Policy.

The 50-state report compiled the amount each income group paid in income, sales, excise and property taxes over a multiyear period. The date shows that most states do, in fact, have regressive tax structures, explained Kelly Davis, the Midwest regional director for ITEP.

“Fairness is, of course, in the eye of the beholder,” reads the study. “Yet almost anyone would agree that the best-off families should pay at a tax rate at least equal to what low- and middle-income families pay. Virtually every state fails this basic test of tax fairness.”

Income taxes are progressive, meaning those who earn more pay a higher percentage. Other state and local taxes, such as sales and property taxes, are regressive. Although they tax everyone equally, those who earn less are paying more proportionally.

“We know that low-income people spent most of what they earned on things that are subject to regressive sales taxes,” Davis said.

The report found that North Carolina families earning less than $17,000 each year give 9.5 percent of their income back to state and local governments. Those earning between $29,000 and $48,000 paid the most, paying 9.6 percent of their annual wages in state and local taxes. Those earning $1,150,400 or more annually, the wealthiest bracket, pay 8.1 percent.

According to the U.S. Census Bureau, the median annual household income in Buncombe County was $43,805 in 2008, roughly 16 percent below the national average.

ITEP's mission is to “keep policymakers and the public informed of the effects of current and proposed tax polices on tax fairness, government budgets and sound economic policy.” But Davis said it is up to voters and legislators to decide what to do with the information.

“Our role is to give data and make people aware of this information,” Davis said. “Making sure people are aware of tax policy is a good first step.”



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Sources: Asheville Citizen Times, John Locke Foundation, Carolina Journal TV, Granitegrok, Google Maps