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Irony, hypocrisy and flawed methodology on Tax Day


The irony seemed to completely escape Governor Pat McCrory Wednesday as he took the podium at a Tax Day event to heap praise on last year’s tax package that gave huge breaks to millionaires and large corporations while asking many small businesses and most North Carolina families to pay more.

McCrory hailed the tax changes as a boon to the state’s future just two days after a legislative committee charged with coming up with a way to increase teacher pay acknowledged there wasn’t enough money to fund raises for all teachers next year.

North Carolina currently ranks 46th in the country in teacher pay and it takes 14 years for a teacher to earn a $40,000 salary.

McCrory has proposed raising salaries for new teachers next year but leaving any increases for veteran teachers dependent on the state revenue picture—which thanks to the regressive tax cuts means it’s highly likely they won’t be getting one.

The Fiscal Research Division of the General Assembly recently reported that personal income tax collections are more than $200 million below projected levels because of the tax changes.  And that does not include the $438 million loss in revenue already built into the budget because of the tax cuts.

It wasn’t supposed to be this way. Just over a year ago, McCrory told state lawmakers in his State of the State address that any tax reform must be “revenue neutral.”

If McCrory had simply lived up to that commitment there would be enough revenue to give all teachers and state employees a raise next year.

McCrory made his remarks on Tax Day at a media event held by a right-wing think tank heavily funded by McCrory’s own state budget director, Art Pope. Pope himself weighed in with lavish praise for the regressive tax shift in a misleading and hypocritical column in the News & Observer.

Pope dismissed criticism of the decision by legislative leaders to allow the state Earned Income Tax Credit to expire and in effect raise taxes on more than 900,000 low wage workers by bizarrely blaming the Democrats who created  the state EITC for its expiration—as if the Republicans in control of the General Assembly last session were powerless to renew it.

Then Pope made the hypocritical leap to also claim that it is Republican legislative leaders who deserve credit for helping the poor since they decided not to renew a temporary sales tax increase that expired in 2011.

Apparently Republican legislators in control of the General Assembly should be celebrated for not renewing a sales tax increase but excused for not renewing the state Earned Income Tax Credit.  That somehow is the Democrats fault.  Pope also neglected to mention that lawmakers also allowed a temporary tax surcharge on the wealthy to expire in 2011 too, further adding to regressive nature of the combined tax changes in the last few years.

But maybe the most disturbing part of the Tax Day propaganda blitz from Right Wing Avenue was the assertion that most people in North Carolina will pay less in taxes thanks to the changes passed in 2013.

It is simply not true.

The N.C. Budget & Tax Center finds that most middle class and low-income families will pay more on average under the tax plan, but it’s easy to see why the folks on the Right feel obligated to distort the facts to say otherwise.

There’s no dispute that a millionaire will pay nearly $12,000 less under the tax change.  That’s a hard sell, especially when families are losing their college savings plans, losing their EITC, paying more to see a movie, etc.

The claim that most taxpayers are paying less is based on a study plagued by flawed methodology.  It’s not even clear if the study considers the elimination of the state EITC at all and it uses arbitrary income groups that do not fit North Carolina.

The study uses an income level of up to $100,000 to determine the effect of tax changes on low and middle income families. But $100,000 is hardly middle income in North Carolina. Only the top 11 percent of taxpayers make that much.  More than two-thirds of taxpayers earn less than $50,000.

The bottom line is that most families will pay higher taxes on average because of the changes made by the 2013 General Assembly and Governor McCrory.  Some corporations and most wealthy individuals will pay much less.

And it is not just the N.C. Budget & Tax Center that thinks so.

The staff of the Republican General Assembly does too, as an Associated Press story pointed out in December.  A married couple with two children earning $20,000 a year will pay $262 more under the new tax plan while a married couple with two children that earns $250,000 will get a tax cut of $2,318.

No wonder the Right is playing games with the numbers. The reality isn’t sitting very well with families struggling to make ends meet and watching millionaires get a tax break that is not much less than a minimum wage worker earns in a year.

You have to give the folks on the right credit for one thing. It’s not easily to pack irony, hypocrisy and flawed methodology into a single day, but McCrory, Pope, et al managed to do it on Tax Day 2014.

Category: Political News

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