Our friend Donald Bryson at the John Locke Foundation has posted some very good facts on tax cuts that North Carolinians will enjoy as a result of the latest legislative actions passed in 2021.
“Your personal income taxes will be decreased from 5.25% of your income to 4.99%. The state’s median income earner, earning $50,653, will save $131 in taxes in 2022. In future years, savings will grow as the personal income tax decreases to 3.99%.
“The standard deduction in the personal income tax code will increase, providing targeted relief to benefit low-income households most. The deduction will increase from $21,500 to $25,500 for joint filers; $10,750 to $12,750 for single filers; $16,125 to $19,125 for heads of household; and $10,750 to $12,750 for married families, filing separately. This means that the median earner making $50,653 (filing as a single) will only pay taxes on 75% of their income.
“The child tax credit deduction will increase by $500 per child. New deductions will range from $3,000 for lower-income earners filing jointly to $500 for those making between $120,000 and $140,000. Joint filers with incomes above $140,000 receive no deduction.
“Military personnel will no longer pay taxes on their retirement benefits (retroactively to January 2021). North Carolina is home to the fifth-largest share of military personnel in the nation. This change will save North Carolina veterans $30 million.”
That is all great news for North Carolina taxpayers. But it’s not the first time in the last few years that the Reform Majority in the NC General Assembly have cut taxes. Since they came into power back in 2010, the conservative leadership has been working steadily to decrease the tax burden on North Carolina citizens and have made tremendous strides in cutting taxes.
The national Tax Foundation, the foremost authority on state taxes and spending in the country, recently called North Carolina “the foremost leader in pro-growth state tax reform over the past decade” at a Carolina Partnership for Reform forum.
In another recent blogpost, Tax Foundation Senior Policy Analyst Katherine Loughead said:
“With the adoption of its new budget in mid-November, North Carolina has reinforced its position as a leader in pro-growth tax reform, becoming the 12th state to enact income tax rate reductions in 2021 alone. (An additional four states implemented income tax cuts in 2021 that were previously adopted or were automatically triggered upon meeting revenue targets.) North Carolina’s recently adopted reforms further reduce the state’s flat income tax rate, ultimately to 3.99 percent, and will eventually phase out the corporate income tax.
“Even before this year’s reforms, North Carolina has been one of the foremost leaders in pro-growth, structurally sound, comprehensive state tax reform over the past decade, enacting comprehensive tax reform in 2013 and then building on those reforms in 2014, 2015, and 2017. This year, the state reinforced that legacy with reforms that will set the state up for another decade of leadership in the realm of pro-growth state tax policy changes….
“Before the 2013 reforms, North Carolina had the highest individual and corporate income tax rates in the Southeast. Today, North Carolina has the lowest corporate rate and among the more competitive individual rates. When the 2021 reforms are fully phased in, North Carolina’s individual income tax rate will have been cut nearly in half between 2013 and 2027.”
That is amazing progress. And NC taxpayers should be celebrating and joyfully cheering on the good news.
But the problem is NC taxpayers don’t know their good fortune! They don’t know their taxes have dropped drastically!
Very legitimate polls taken in North Carolina in the last few years have asked the question over and over to NC voters as their tax rates have dropped as a result of legislative action: “Do you believe your state income taxes have gone up, gone down, or stayed about the same over the last five years?”
The answer is always “gone up.” Not even “stayed the same.”
Why? Could it be because the NC press doesn’t tell them their taxes have gone down? Maybe if they were told over and over on TV and in social media, they’d know it. But it’s highly expensive to run TV and digital ads telling that truth, so meanwhile taxpayers will stay in a thick fog about the tax cuts they are currently enjoying. Unless somebody figures out a way to tell them.
So we’re going to try something here. We want you to forward this blogpost all around to your friends, co-workers and family and tell them how their taxes have dropped in the last decade. Let’s see if we can begin to educate them on a very important part of their civic lives.
Here’s the message. Sing it loud and clear. Post it far and wide.
NC TAXPAYERS’ PERSONAL INCOME TAX RATES HAVE GONE DOWN IN THE LAST DECADE!
Maybe you can make a difference.