UPDATED JULY 22, 2013: The tax deal that was reached by House and Senate represents a compromise between bad and worse. The plan not only fails to fix the problems with our tax code but also favors the wealthy over the middle-class and low-income people even more while being unable to support the public services that North Carolinians value.

Tax Provision Final Tax Plan The Better ChoiceIncome Tax Structure Flat

The personal income tax is the best way to ensure that the tax code does not favor the wealthy. In order for that to work though it must be structured so that as income rises, the share of income paid towards the tax increases with the wealthiest households paying significantly more than the lowest income ones. The best way to achieve a progressive personal income tax is with graduated rates and refundable credits (which are more effective at ensuring low- and middle-income taxpayers benefit than deductions).

Income Tax Rate 5.75% by 2015

Itemized Deductions Allows three itemized deductions: caps mortgage interest deduction & property

taxes at combined $20K/ charitable contributions not capped

Social Security Income Exempt

Corporate Income Tax Allowed to lower to 3% by 2017 The corporate income tax is the best way to ensure profitable corporations contribute towards the maintenance of the public services from which they benefit. Eliminating loopholes that only benefit a small number of businesses in order to lower the tax rate for all businesses would be a better choice.

Corporate Loopholes Maintains most corporate deductions and exemptions

Sales Tax Base Expanded to some servicesExpansion of the sales tax base to services would better

align the tax system with the modern economy. However, such expansion should not be used to pay for cuts to the personal and corporate income taxes. Rather, it should be accompanied with a rate reduction and a larger state EITC to offset the impact on low- and middle-income taxpayers of the sales tax.

Local Food Tax Maintained

Revenue Neutral for State? Loses an estimated $661 million annually Revenue losses in the current environment will hurt the state’s ability to recover from four years of drastic cuts and will make it very difficult for the state to keep up with a growing population and the rising cost of delivering services.

Revenue Neutral for Local Governments?

Slight increase in revenue