Fact Check: The Senate GOP Tax Plan
U.S. Sens. Richard Burr and Thom Tillis just voted to raise North Carolinians’ taxes. The tax-reform bill that they and other Republican senators passed over the weekend will raise taxes on 55 percent of North Carolina households over the coming decade – $900 per household, for a total of $2.2 billion.
You may wonder how this legislation was advertised as a tax cut, not a tax increase. That is because high-income households will pay far lower taxes. The richest 45 percent of North Carolina households will receive breaks totaling $17 billion, or $9,000 per household. The top 4 percent of households will receive breaks of $47,000 each, and the top 1 percent will see their taxes drop an average of $115,000.
Overall, government revenue will fall, even though most North Carolinians will be required to contribute more. The bill is projected to increase the federal debt by $1 trillion over the next decade. Burr, Tillis and other Republicans who usually oppose deficit spending might then use the ballooning debt – which they are creating – to propose cuts in the safety net that our society depends on, including unemployment insurance, health care, retirement benefits and food for needy children. If that happens, then most North Carolinians will pay more for government services and receive less in return.
These tax numbers are not secret statistics. They come from Congress’s own Joint Committee on Taxation, which is staffed by economists, attorneys and accountants. Two weeks ago, the Joint Committee on Taxation calculated the effects of the Republican tax bill on each income category and concluded that the proposed changes would raise taxes on the poorer half of Americans by $63 billion over the coming decade. The wealthier half would save more than $1 trillion.
In North Carolina, one of the poorer states in the Union, more residents fall into lower income categories, so a larger proportion of North Carolinians will face a tax increase than elsewhere. Within the state, more people will face tax hikes in the poorest counties, including many areas that voted heavily for Burr and other Republican candidates in 2016.
This is contrary to Burr’s pledge, when he was running for re-election last year, to “lower the tax burden for everyone.” Last month, Burr claimed that the Republican legislation “lowers taxes for families in every income group.” That holds true only for the next two years, and not for the following eight years, as tax cuts for lower-income families expire.
It is worth noting that the Republican tax bill was revised since the Joint Committee on Taxation released its report. Last-minute changes included an expansion of “pass-through” benefits that real-estate developers and other wealthy individuals use to reduce their taxes. Congress did not give its experts time to calculate the effects of the final revisions on different income categories.
Senators Burr and Tillis will have a second chance to vote on the tax bill after the House and Senate negotiate a “reconciliation” of differences in the two chambers’ versions. Will they vote again to increase North Carolinians’ taxes?
Charles Kurzman is a professor of sociology at the University of North Carolina at Chapel Hill.