MEDIA RELEASE: Tax Day event sheds light on North Carolina's new tax plan and its impact on working families

Advocates from around the state urge lawmakers to reverse course on eliminating the state EITC

RALEIGH (April 15, 2014) – The tax plan passed by the General Assembly during the 2013 legislative session resulted in a tax shift onto working families. Advocates from around the state joined together on Tax Day to bring awareness to the plan, which is bad for working families, children, business, and the economy. Under the new plan, which will took effect in January 2014 and will impact income tax filing in 2015, low- and middle-income families will see their taxes go up on average, while wealthy taxpayers and corporations saw large tax cuts.   

The state Earned Income Tax Credit was also a casualty of the new tax plan, as lawmakers decided to let the credit expire, in turn making North Carolina’s upside down tax system even worse. The EITC has helped families across the state pay for bills and basic necessities such as groceries and car repairs, while offsetting other taxes and work expenses that struggling working families pay.

“For nearly four decades, the EITC has been a centerpiece of conservative social policy and enjoyed bipartisan support,” said Dr. David Ribar, a professor of economics at UNC Greensboro. “The EITC is needed more than ever in North Carolina, where job growth has occurred mainly in low-wage jobs.”

Melea Rose-Waters, a member of North Carolina MomsRising, highlighted how women and children were among the biggest losers under the tax plan passed last year. In addition to changing the tax structure, lawmakers chose to protect sales tax exemptions for large, expensive items, while cutting education funding, the Child Care and Dependent Tax Credit, and the EITC, a modest but vital support for low-wage workers.

“The NC EITC is not a giveaway or a hand out. The EITC is designed to encourage and reward work, and leaders of both parties have praised it for its effectiveness in helping lift families and children out of poverty,” Rose-Waters said. “It also has long-term benefits for the economic security of NC women. It has proven effective in significantly increasing attachment to the labor force among single mothers and boosting the size of the Social Security retirement benefit amount these women eventually receive.”

Nearly one million North Carolina families will claim the state EITC for the last time on Tax Day, bringing pain to families and the state’s economy. It’s not too late to reverse course, however. State lawmakers should reinstate the EITC in May during the Short Session, said Tazra Mitchell, a policy analyst with the Budget & Tax Center, a project of the NC Justice Center.

“The EITC goes to families that work but earn low wages, and helps them keep more of what they earn so that they can support their children, get a foothold in the labor market, and avoid public assistance,” Mitchell said. “Nearly 1.2 million Tarheel children, not just their parents, will feel the economic pain brought on by the loss of the state EITC. Its loss could push families into poverty at a time when North Carolina already has the 10th highest poverty rate in the nation.”

Mary Klenz, with the League of Women Voters in Mecklenburg County, said she was proud that state policymakers established the EITC in 2007.  It not only served to help working families but also addressed in part the state’s upside down tax code.

“Our tax system must be able to raise adequate revenue to support the things that deliver a strong economy—an educated workforce, sound infrastructure, a high quality of life and safe and clean communities,” Klenz said. “Ultimately, it should be a tax system that does not ask more from low- and middle-income taxpayers.  Reinstating the state Earned Income Tax Credit is an important way to get us back on track to addressing that issue and building a modern tax code reflective of the values we hold as North Carolinians.”

FOR MORE INFORMATION CONTACT: Amber Moodie-Dyer, amber@ncjustice.org, 919.856.2176; Jeff Shaw, Director of Communications, jeff@ncjustice.org, 503.551.3615 (cell).
 

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