Apr 14

N.C. Taxpayers to Save Close to $2.4 Billion

Raleigh, N.C. – As the state tax filing deadline approaches, the vast majority of North Carolinians will keep more of their own tax dollars due to policy decisions made by the Republican General Assembly during the past two legislative bienniums.

A nonpartisan legislative analysis shows tax reforms enacted by the legislature, including the expiration of some special tax loopholes, will cut taxes by close to $2.4 billion in Fiscal Year 2015-16, compared to when Democrats last controlled state government in 2010.

The single biggest savings comes from allowing a temporary one-cent sales tax to expire, which has returned at least $1 billion to North Carolinians’ pockets every year since it ended in 2011. In spite of rhetoric claiming to want to protect lower-income individuals, legislative Democrats fought to extend this regressive tax on working families.

And in 2013, the General Assembly passed and Gov. Pat McCrory signed into law historic tax reform that significantly reduced the top personal income tax rate – from 7.75 percent (then the highest in the Southeast) down to 5.8 percent in 2014 and 5.75 percent in 2015 – and created a zero percent tax bracket for up to the first $15,000 of income.

Nonpartisan analysis shows these reforms provided a tax cut to North Carolina households inevery income category. (See attached chart.)

“While you can spin rhetoric, you cannot spin basic math – and nothing the left says can change the fact that North Carolina families in every income category have seen their taxes go down,” said Senate Leader Phil Berger (R-Rockingham).

“The tax reforms we passed are working – they’re boosting the state’s climate for job creation, driving down unemployment and returning more money to the North Carolina families and small businesses that earned it,” said Senate Finance Committee Co-Chairman Bob Rucho (R-Mecklenburg).

As a part of simplifying the tax code for the first time since the 1930s, the tax reform law eliminated some special loopholes that benefitted only a small number of people while leading to higher rates for all taxpayers. But it retained the state child tax credit and continued to offer state deductions for mortgage interest, property taxes and charitable contributions.

In addition, it revised the formula to ensure the state no longer over-withholds tax dollars from paychecks and receives what amounts to interest-free loans from taxpayers over the course of the year. Under the change, most North Carolinians will see a net reduction in their overall tax payments, even if they receive a smaller refund check or make a payment to the state. And they will control more of their own money to spend, save or invest throughout the year.

H998 Fiscal Impact Income Groups 2011-2014 Tax Change Summary

2011-2014 Tax Change Summary

Read More:

The Facts on NCGA’s Tax Cuts

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