The NC tax code reinforces racial exclusion; Senate proposed budget would make matters worse
New tool enables policymakers to assess and improve the impact of tax policy on racial equity
Tax policy is not racially indiscriminate, and specific conceptions of tax policy can be attributed to outcomes that have prevented Blacks, Aboriginals and Browns from reaching their full potential and achieving a quality of life. high.
Currently, the General Assembly has the opportunity to assess the potential impacts on the Black, Brown, Indigenous and White North Carolinas before adopting tax changes in the final budget. Taking into account these impacts – along with the already documented benefits for wealthier North Carolina residents and critical income losses for community priorities – policymakers can make a final decision on how to maintain the incomes of their own. the state needs to invest in what is best for every North Carolinian.
When one applies a unique tool developed by the Institute on Taxation and Economic Policy to assess the racial and ethnic impact of the budget proposal approved by the State Senate in June (SB 105), it becomes clear that the proposed income tax cuts will make matters worse. state exclusion tax code. This analysis should serve as a warning to House budget writers, as well as to the governor, about the disproportionate harm that would result from the Senate tax plan and the greater cost to all of us of growing a more unequal society. .
Here are three charts summarizing the analysis.
First, the personal income tax cuts contained in SB105 are skewed in favor of the wealthiest families, a disproportionate share of which is white due to the rules and practices that have governed our economy and have excluded people from poverty. color of wealth building, equal pay and access to the highest paying jobs and education. White families earning six-figure incomes represent only 16% of all families in North Carolina, but they would reap 54% of the proposed tax cut. Overall, 77 percent of the tax cut would benefit white families, even though white families only make up 67 percent of all North Carolina tax returns.
Second, white families with incomes less than $ 59,000 would get only 10.1% of the total tax cut resulting from the income tax changes, compared to 54% of the tax cut. benefit the richest white North Carolinians. North Carolinians with incomes in the bottom 60% of the income distribution of all races do not receive a commensurate share of tax cuts.
Finally, black and Latin families would fare badly with this proposal. The average tax cut for black families ($ 480) would be 42% lower than the average tax cut for white families ($ 831). Likewise, the average tax cut for Latinx families ($ 426) would be 49% lower than the average tax cut ($ 831) for white non-Latinx families.
In short, Senate tax cuts would set our state back. The House should present a clear alternative in its budget by directing our public funds towards public goods that expand access to economic well-being for all, as well as by reversing the disproportionate advantage given to the richest by targeting reductions in ‘taxes on those with the lowest incomes.
To learn more about this topic and how to bring greater racial fairness to tax policy, check out the following resources:
This growing body of work – including our own specific contribution to North Carolina – helps to further reveal the essential and positive role that politics can play in advancing equity and opportunities for all. It should, as is increasingly the case at the federal level and in state and local governments across the country, be integrated into the infrastructure of public policy analysis.
Alexandra Sirota is the director of the NC Budget & Tax Center.