Who Pays in 2014 – Tax Plan Creates Winners and Losers in North Carolina

Changes are coming to who pays taxes in North Carolina, and the news is not good for middle- and low-income taxpayers. This tax season marks the final year taxpayers will file their income taxes under the state’s old tax code and by next year it will be apparent to many taxpayers that the tax plan has not just reduced available dollars for investing in core public services, but also has increased the tax load for many.

The tax plan passed by lawmakers last year shifts the responsibility of paying for public investments to middle- and low- income taxpayers and provides tax cuts to profitable corporations and wealthy taxpayers. Despite evidence showing no clear relationship between tax cuts and positive state-level economic performance, North Carolina lawmakers paid for these massive tax cuts for the wealthy by shifting the tax load onto middle- and low-income taxpayers, making the state’s already upside down tax system worse.

North Carolina’s new tax code results in taxpayers at the lowest end of the income spectrum, with income of $17,000 or less, paying around 9.5 percent of their annual income in total state and local taxes while taxpayers at the upper end, with income of $345,000 or more, pay about 5.5 percent of their annual income in total state and local taxes.