While the Republican-led General Assembly is pushing for tax reform, the youth arm of the North Carolina Democratic Party is challenging the state Senate’s plan, claiming it’s biased in favor of the wealthy and corporate interests in the state.
The N.C. Fair Tax Act, a tax reform plan proposed by Republican Senator Phil Berger, aims to cut taxes and reform what Berger and other members of his party call an outdated tax system.
The plan essentially shifts the burden of tax revenues from income taxes to taxes on spending. It would lower the income tax level from 7.75 percent to 4.5 percent and increase taxes on items like groceries. It would also add sales taxes to services that are not currently taxed.
According to the tax calculator on the website for the Tax Fairness Act (nctaxcut.com), a site run by the state Republican Party, a taxpayer making $30,000 per year with a dependent spouse and one child would pay almost $1,000 more in taxes each year under the plan. However, a taxpayer making $100,000 per year with a dependent spouse and one child would receive a tax cut of nearly $3,200 per year.
The state’s Young Democrats have taken the lead in speaking out against the Fair Tax Act. The group has created a website (nctaxhike.com) which argues that the plan would negatively affect North Carolina’s lower and middle class citizens, students, young children and the elderly while benefiting the state’s wealthiest residents.
Young Democrats president Sam Spencer said there is no good evidence that the proposed act would benefit the state overall.
“Think tanks in North Carolina have looked at how this idea of tax reform has played out in Southern states that went Republican long before North Carolina,” Spencer said. “What they found was no evidence that [this kind of] tax reform led to job creation. North Carolina has always had different values, and we have the best community colleges, colleges, and universities in the Southeast. We have a comparative advantage when it comes to education, and education is what creates jobs in North Carolina – not slash-and-burn economics.”
However, Spencer said tax reform in North Carolina is a good idea, but the kind of reform Republicans are proposing has proven to be detrimental in other states where it has been implemented.
“There’s absolutely merit to the idea of reforming the tax code, but it’s all in how you do it,” Spencer said. “Making the poor pay more and cutting services while the rich get a tax break is immoral, and it’s bad economic policy. North Carolina is recovering from a recession, so the last thing we need to do is raise prices at local businesses.”
The Young Democrats are encouraging students and others who would be affected by the plan to call Gov. Pat McCrory’s office to make their feelings known.
“Call Gov. McCrory and ask your friends to do the same. He needs to hear from the people of North Carolina,” Spencer said.
