NC Senate Proposes Reduction in Top Income Tax Rate
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Last week the North Carolina Senate produced its version of the state budget, which included:
• Reducing the state sales tax and the top income tax rate each by 1/4 percentage point, eliminating the last of a 2001 increase in both taxes. This would bring the highest income tax rate down to 8%. The top rate only applies to those with income over $120,000 per year. The House version of the budget did not reduce either.
– While the sales tax cut would benefit everyone, a quarter percent would not provide significant relief for anyone. A low-income person spending $10,000 annually on items subject to sales tax would only save $25 over the course of the year! Likewise, the cut in the income tax will not produce appreciable savings for high income earners. For someone with taxable income of $220,000 per year, there would be a savings of just $250. A taxpayer with income of $150,000 would pay only $75 less. Not that I’m complaining….
• No state version of the federal Earned Income Tax Credit and no funds to help counties pay their share of rising Medicaid costs. The House version did both.
