A few weeks ago, as the legislature considered yet another tax cut proposal, the NC Justice Center released a report exploring who had benefited from the varied alterations in sales and income taxes of the past few years. There has been a good deal of confusion on this front as Republican leaders have boasted of massive reductions in taxation – changing the lives and fortunes of everyday Tar Heels. Turns out that’s not exactly right.
The state sales and income tax changes from 2013 to 2015 (the most recent available data) resulted in the following annual total dollar alterations:
Top 1 percent (richest) of taxpayers: $14,977 cut
The next 4 percent of taxpayers: $1,952 cut
The next 15 percent: $465 cut
The fourth quintile of taxpayers: $75 cut
The middle quintile: $6 cut
The second quintile: $28 tax increase
The bottom (poorest) quintile: $30 tax increase
Three-quarters of the total tax benefit went to the top 20 percent of earners. In 2015, those making less than $20,000 a year paid 9.2 percent of their income in state and local taxes. Those making over $376,000 annually paid 5.3 percent.
75 The percentage of the total benefit of North Carolina tax cuts that went to the top 20 percent of earners
9.2 The percentage of income that those making less than $20,000 a year in 2015 paid in state and local taxes
spanThe percentage of income those making over $376,000 annually paid
Let that sink in for a minute.
▪ First, compare the rhetoric to the reality. For Pat McCrory, Phil Berger and Tim Moore, it is “all tax cuts, all the time.” It is, they endlessly claim, what they dream of, what they promise, what they deliver, their policy beaux ideal, their shining, overarching and exclusive mission. They govern, in fact they exist as politicians, to cut taxes.
But if we were to require even modest truth in labeling they’d have to say: We’re the outfit that creates massive tax cuts for the wealthy and tax increases for the bottom 40 percent. Even for the bottom 80 percent, we’ve delivered only a few pennies as we’ve shredded the state’s already thin safety net. And we’ve saved the biggest tax increases for the poorest Tar Heels. But, man, haven’t we done yeoman’s service for the top 1 percent? Join us in our great crusade: “More for those who already have the very most.”
▪ Second, there is the reality of the policy choice. We are, in North Carolina, one of the most economically polarized commonwealths in the world. Our top economic quintile already claims a larger share of our wealth and income than has occurred in a century. We also have the fastest-rising poverty and concentrated poverty rates, and one of the most daunting hunger rates, in America. Given that backdrop, handing over almost $15,000 a year to those at the top while increasing the taxes of the bottom two-fifths is heinous. Or beyond heinous. It ought to be impeachable.
▪ Third, there is the brute political reality that undergirds this callous and deceptive scheme. Our leaders, as indicated, say they are the allegiant tax cutters. I think they even believe it. But, given their record, how can it be so? The missing link, of course, is that for our governor and General Assembly the economic bottom half simply don’t exist. They aren’t part of the constituency. They might as well be in, and from, Madagascar. In this way, our lot can explain, still, that they never raise taxes. They can sign pledges, annually, committing never, in this life, to do so. They would, they assert, willingly suffer eternal damnation before increasing our obligation to the taxman.
They cling to such demonstrably false puffery as they, for example, abolish the earned income tax credit, raising the tax bill for over 900,000 Tar Heels making about $35,000 a year. And they swear continuing no-tax fealty as they gleefully impose sales taxes on car and appliance repairs, falling principally on the poor. I think they actually mean: “We promise never to raise taxes on those who matter.”
▪ And finally, North Carolina has obviously produced a massive political machine, accompanied by a giant advocacy infrastructure, boldly committed to this merciless campaign. Fevered adherents of government by and for the richest among us. Servants and lickspittle, it seems, to those in economic ascendancy.
It is an odd calling – this expansive, burgeoning, nation-leading war on the poor. I’ve sometimes wondered how it can be embraced as either defining ideology or crucible for a life’s work. John Kenneth Galbraith tagged it “one of man’s oldest exercises in philosophy, the search for a superior moral justification for selfishness.” But even Galbraith would be surprised by the cold, intentioned cruelty of the political leadership of North Carolina.
Gene Nichol is Boyd Tinsley Distinguished Professor at UNC-Chapel Hill.