John Hood methodically refutes the false Leftist narrative about North Carolina’s historic tax reform. Now that it’s tax filing time, you will be hearing the Left make this claim again and again — and it’s false.
Once again, let me explain the source of the false claim. In 2013, the Washington-based Institute for Taxation and Economic Policy (ITEP) provided the left-wing North Carolina Justice Center with a distributional analysis of the tax reform bill. ITEP modeled the effects within each quintile (20 percent) of taxpaying households. Rather than producing and distributing a count of the share of North Carolinians getting tax hikes or tax cuts, however, ITEP/Justice Center focused on the “average” effect within each quintile — and then made the claim that for the bottom four quintiles in household income, the bill would raise taxes “on average.”
That phrase is important. Even if the study had been accurate, its finding was not that 80 percent of households got a tax hike. In fact, ITEP/Justice Center later admitted that its numbers showed that half of North Carolina households got a tax cut, 35 percent got a tax increase, and for the rest the results were a wash. Why didn’t they lead with this less-apocalyptic finding rather than just surrender it later when pressed by reporters? The question answers itself.
Hood continues with an important reminder for all tax filers:
When filling out their returns for the 2014 tax year, many North Carolinians are discovering that their refunds are smaller than they used to be. But when taxpayers actually compare 2014 taxes paid to previous years, most find that they are better off. A refund simply means you’ve given the government an interest-free loan.
