A couple weeks ago, Gov. Cooper published an article criticizing the results of North Carolina’s tax reforms over the last 4 years, as a warning against federal tax change proposals, saying “Washington’s Tax Schemes Look Eerily Familiar.”
Rep. David Lewis offered his counterpoints here, mainly highlighting a litany of positive economic news from the last few years, while declaring that Cooper gets the story wrong.
Cooper’s main criticism revolves around a chart purporting to show that economic gains in NC since 2012 have been more focused on upper income people compared to other states. The calculations for the chart are sloppy and largely inconclusive, when one takes into consideration that it is not the same people occupying each of the income brackets over time. Many people fluctuate between brackets, and North Carolina remains one of the most popular destinations for in-migration, which means that “income gains” of the “top 10 percent” are not going to the same people.
The chart got much of the attention, but there was another comment in Cooper’s article that I believe deserves some attention. Cooper wrote of tax cuts passed earlier this year that “more than half the tax breaks go to families earning more than $100,000 a year.”
Of course, tax breaks can only go to those who pay taxes. The more than a million filers already not owing any state income taxes won’t receive “a break” according to Cooper, which helps to skew his calculations.
Moreover, just what share of state income taxes do those earning more than $100,000 pay? Wouldn’t that lend some needed perspective to Cooper’s claims?
The latest data available is from this year’s Comprehensive Annual Financial Report, published by the State Controller’s office.
The chart below shows that in 2015, income earners above $100k paid a combined 52.5% of the total state income tax liability (while making up only 9.3% of the filers). So it seems pretty proportionate for half of the “tax breaks” to go to those paying more than half of the taxes.
“So it seems pretty proportionate for half of the “tax breaks” to go to those paying more than half of the taxes.”
“proportionate” …. the issue of taxes is not so simple and narrow.