Gov. McCrory and Republican lawmakers in the General Assembly passed a tax reform law in 2013, but the full effects of that law haven’t been felt until tax season of this year and the results are surprising a lot of people. While politicians called their plan a tax cut, a majority of North Carolina families will actually see their overall state tax burden increase, while most of the benefits went to the wealthy and big corporations. That’s not only unfair, but it hurts families who are already struggling to make ends meet.

A Tax System That's Unfair to Working Families

The 2013 tax plan was built around a reduction of income tax rates from a progressive structure into a new flat rate of 5.8% this year and 5.75% after that. Now every income taxpayer would see some benefit from this cut, but wealthier people would get a much bigger break. In addition, the corporate tax rate was cut from 6.9% to 6% this year and even lower in future years. That change benefits mostly wealthy shareholders. The NC Budget and Tax Center estimated that 66% of all the benefits in the tax plan go to the top 1% of earners. While income taxes were lowered, the tax plan raised several other types of taxes including sales taxes on home electricity, college meal plans and tickets for movies, sporting events and concerts.

The tax package also eliminated several tax breaks that were helpful to middle-and-lower income families, such as, the back-to-school sales tax holiday, child care tax credits, tax benefits for college savings plans (529s), deductions for seniors’ medical expenses and most importantly, the Earned Income Tax Credit for families earning less than $50,000 a year.

In the end, the effect of the tax plan is to dramatically reduce state government revenue used to support public schools, public health, and other government programs. The tax plan has cost an estimated $1 billion in lost revenue already and the state is currently facing a $271 million budget shortfall for the current year. Tax cuts for the wealthy have already forced budget cuts for teaching assistants, textbooks and more and they will only continue to jeopardize the investments we can make in our future.

An Economy That Isn't Working for the Middle Class

While Gov. McCrory proclaims a “Carolina Comeback,” the average North Carolinian just isn’t feeling it. Since 2011, median household income has fallen sharply. North Carolina now ranks 47th in the nation in median household income.

The percentage of North Carolinians who have a job or are looking is at its lowest point since data tracking began in 1976—less than 60%! And 57% of all jobs created since the Great Recession pay poverty-level wages.