The myths versus the reality of the tax plan (NC Policy Watch)
Myth: Everyone in North Carolina will have more money in their pocket under the new tax plan unveiled by House and Senate leaders this week.
Reality: Many people will see fewer dollars in their pockets. With the elimination of the state Earned Income Tax Credit nearly 1 million North Carolinians will likely have less money, including 64,000 military families.
Parents who send their children to child care will no longer be able to claim the child and dependent care credit and that could increase their income tax. If they own a small business, the $50,000 business income deduction is eliminated.
Other ways that the income tax load goes up—no more medical expense deduction, loss of the personal exemption, loss of the standard deduction for seniors and the deduction for retirement income. Read more here.
Myth: Tax scenarios from the Fiscal Research Division of the General Assembly show that people at all income levels will pay less taxes under the new plan.
Reality: The Fiscal Research analysis looks at sample taxpayers, rather than all taxpayers. When we look at all taxpayers, it turns out that 80 percent of taxpayers will on average see a tax increase. And even the Fiscal Research Division analysis finds many scenarios where sample taxpayers will pay more under this plan, including for example, families with two children who earn $64,000 a year who will pay $2,700 more.