North Carolinians: Paying and paying for their legislature’s fraudulent tax policies

Published February 1, 2024

By Rob Schofield

P.T. Barnum once famously said that there’s a sucker born every minute, and down through the centuries, that cynical adage is one that hucksters of many different stripes – politicians, preachers, snake oil-selling businesses – have taken to heart.

For a classic example of Barnum’s motto in action in modern times, however, check out the deceptive shell game Republican legislative leaders have played with North Carolina’s tax code and state budget over the past decade-plus.

Ever since the GOP majorities took control of the legislature in 2011, they’ve passed income tax cut after income tax cut and bragged repeatedly of the supposed enormous benefits this has afforded to average North Carolinians.

Unfortunately, even a brief glance at the numbers reveals that such claims are – for the overwhelming majority of the state’s residents — hogwash.

The evidence is to be found in a) an examination of who pays for the services and structures of state government, and b) the quality of the structures and services the state is providing.

First, a look at our tax structure.

As a new report from the nonpartisan fiscal policy analysts at the Institute on Taxation and Economic Policy (Who Pays? A Distributional Analysis of the Tax Systems in all 50 States) makes clear in damning detail, North Carolina’s repeated reductions in personal and corporate income taxes have provided little in the way of meaningful benefit to average households.

Indeed, the ITEP analysts found that the state’s current tax code is tilted heavily in favor of the wealthy.

At present, the poorest fifth (or quintile) of North Carolinians – households with annual incomes of less than $21,600 per year – pay, on average, more than a tenth (10.5%) of their income in state and local taxes.

Households in the middle quintile — with annual incomes between $42,200 and $73,400 — fare only slightly better. They pay an average of 9.3% of their income in state and local taxes.

But now take a look at the top 1% — households with annual incomes over $697,400. ITEP reports that these folks pay only 6%.

In other words, rich North Carolina households pay 50-75% less of their incomes in state and local taxes than do folks in the middle and at the bottom.

Not only is such a breakdown outrageously unfair and unjust – just think how crazy it is that our state forces people trying to survive on $21,000 per year in 2024 to pay $2,200 in taxes! – but it obviously has a huge impact in limiting state revenues.

Simply put, taxing people of modest income – even at relatively higher rates – brings in a lot less money than taxing people at the top.

And this leads us to the second piece of evidence that debunks the GOP mythmaking – namely, the torn and threadbare state of our core public structures and services.

As news report after news report has documented in recent years, North Carolina has far too few public employees – schoolteachers, prison guards, mental health providers, environmental inspectors — to meet the needs of a big and rapidly growing state. Not only do the legislature’s penny-pinching budgets fund far too few positions, but absurdly low salaries and poor benefits make it a herculean task to fill and maintain even those that are funded.

Two decades ago, North Carolina school principals often found themselves selecting from deep and impressive pools of eager and well-trained applicants to fill teaching positions. Today, many job openings attract two or three applicants, and thousands of slots simply go unfilled.

And while there are, no doubt, many contributing factors to these kinds of shortages – the lingering impacts of the pandemic, a robust private job market, the low morale to which decades of right-wing attacks on public education and public employment, generally, have given rise – it’s indisputable that inadequate funding and low pay top the list.

The losers in all this? Not surprisingly, as with the tax code itself, it’s the families at the bottom and in the middle.

Not only are they more likely to include lower paid public employees, but they’re also much less able than the wealthy to buy essential services in the private market – private schools, a gated community, a reliable commuting vehicle, private care for loved ones in need of assistance, etc.….

And so, the vicious cycle continues.

Sadly, and perversely, however, these things are hard to make widely apparent and understood in a state and nation with deeply ingrained commitments to individualism and low taxes – especially when politicians bearing Barnum-like messages are so well-positioned to dominate the debate.

In short, North Carolina legislative leaders have fashioned a fiscal policy system that is an exploitive con and it’s long past time for the state’s residents to tell them the jig is up. Sadly however, whether average taxpayers will see through the fog of propaganda that conservative politicians have so skillfully manufactured and employed to disguise this hard truth anytime soon, remains highly questionable.