Déjà vu: Another tax plan for the rich
President Trump and Congressional Republicans aim to rebrand enormous tax cuts for the wealthiest households and corporations as a boon to everyday Americans – but North Carolinians, in particular, should recognize this canard. We have heard it before in defense of state-level tax changes that have yet to pan out and that each day cause us to miss opportunities to boost our communities’ well-being.
Indeed, the latest tax plans released by the U.S. House and Senate will make the rich richer while hurting many working and middle-income families in our state.
In 2018, under the U.S. House plan, 30 percent of tax cuts would go to the top 1 percent of households in our state according to estimates from the Institute on Taxation and Economic Policy. That figure grows to 43 percent by 2027.
Even the signature “middle class” tax cut for these plans – the Child Tax Credit increase – laves out millions of children in low-income working families and forces deep budget cuts to essential programs like job training, public safety, health, and education to finance tax giveaways for the super-wealthy.
And that is a critical detail that hasn’t been talked about enough. These proposals abandon a core conservative principle of reducing the federal deficit. It will add at least $1.5 trillion to federal deficits, which will ultimately have to be paid for. The way to pay for these tax giveaways to the wealthy, according to some leaders, is by gutting programs that strengthen economic and health security for Americans, including Medicaid, SNAP (formerly food stamps), and the part of the budget that includes Head Start and college aid.
Worse still, federal spending cuts are likely to involve shifting costs down to state and local governments. Because our state cannot run a deficit, it’s all but certain that cuts to services with widely shared benefits—things like schools, roads, parks, libraries, fire departments, and police departments—will likely follow.
Tax cuts for the wealthy and profitable corporations do not “pay for themselves,” as some in Congress are trying to argue. And they will not boost the economy or the well-being of everyday Americans.
North Carolina knows from experience that when taxes are cut for the wealthiest, we have fewer dollars to meet the needs of a growing state that is trying to compete and deliver a higher quality of life to every resident. North Carolina also knows from experience that tax cuts for the rich haven’t delivered exceptional job growth or the boost to wages needed to make people more secure economically.
Instead, due to large and regressive state tax cuts we continue to have $3.5 billion less each year than we would have had under the old tax code. As a result, North Carolina is struggling to maintain current service levels for children in our public schools, university and community college students, seniors who wish to stay in their homes and families who need health care.
The fact is, if these federal tax cuts become law, they will only make it harder for North Carolinians who have struggled to remain in the middle-class and those who are working hard to join the middle class.
It’s time to stop the reckless pursuit of failed tax cuts for the rich. Let’s move forward with a fiscally responsible, bipartisan tax plan that serves North Carolinians, and all Americans.
Alexandra Sirota is the Director of the N.C. Budget and Tax Center.
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