The Taxman Cometh … and Taketh Away.

September 2, 2022
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In 2011, Rolling Stone Magazine’s readers named Revolver The Beatles seminal album. While not receiving the acclaim of tunes on the album like Tomorrow Never Comes or Eleanor Rigby, the opening track on Revolver was a George Harrison-penned effort entitled Taxman that included the lyrics:

 

Let me tell you how it will be

There’s one for you, nineteen for me

 

Should five percent appear too small

Be thankful I don’t take it all

 

I’ll tax the street

(If you try to sit) I’ll tax your seat

(If you get too cold) I’ll tax the heat

(If you take a walk) I’ll tax your feet

 

Don’t ask me what I want it for

If you don’t want to pay some more

 

Now my advice for those who die

Declare the pennies on your eyes

 

‘Cause I’m the taxman

Yeah, I’m the taxman

And you’re working for no one but me

Joe Biden and the irresponsible liberal spendthrifts in Washington, DC are busy trying to convince Americans that only rubes pay their debts, using a legally dubious maneuver to try to magically wipe over $500 billion of student debt off the books.

But in North Carolina the highly educated and generally affluent (and overwhelmingly white, liberal and Democratic voting) group of beneficiaries of the Biden student loan write-off scheme are about to find out what Harrison meant when he wrote “I’m the taxman and you’re working for no one but me.”

The North Carolina Department of Revenue just released guidance on how student loan forgiveness beneficiaries will need to treat their $10,000 to $20,000 taxpayer subsidized windfall for North Carolina tax purposes.  The short answer is program recipients will pay taxes on their benefit at the state personal income tax rate.

This isn’t all bad news.

First, beneficiaries – who likely didn’t learn much about tax policy in college – will get a lot of firsthand personal experience with the Reform Majority’s widely praised overhaul of North Carolina’s income tax regime.   In particular, they may discover the benefit of the State’s exclusion from taxation of the first $25,500 of income that couples filing jointly earn (or, in this case, were given).

Second, with about 3.25% of our country’s population calling North Carolina home, all the state taxes program recipients pay will swell the coffers of Dale Folwell’s treasury.  Our quick back of the envelope estimate (3.25% of $500 billion, taxed at an effective North Carolina personal income rate of 4.5%) is beneficiaries of the student debt write off could owe around $700 million in state income taxes in coming years.  If the past is any indication, the Reform Majority will use a portion of those funds to lower all our taxes.

And finally, while you may no longer have to honor your debts, this is a good reminder for all of us that there are still only two certainties in life:  Death and Taxes.


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