The Koch brothers, by way of their political group Americans for Prosperity, have made North Carolina one one of their flagship states for pushing their extreme agenda. They helped pour money into races in 2010 and 2012 to fill the state legislature with Republicans who would push their ultra-conservative policies, and it worked. Now, Speaker of the NC House and US Senate candidate Thom Tillis is running the show.
In 2013, Tillis passed a budget that was not only supported by AFP, but one that they are now holding rallies to celebrate. This is part of a $500,000 campaign to champion the new budget, and tell North Carolinians that these new policies are working, with an emphasis on Tillis’s tax reform.
The truth is that these policies are working–for the wealthy few. But as millionaires are seeing massive tax breaks, senior citizens on retirement income and small business owners are seeing tax increases.
On top of shifting more of the tax burden to middle-class families, Tillis has gutted the state’s education budget. He has stripped $500 million in education funding over two years, cut 13,000 education jobs, and good teachers are leaving the state due to a pay scale that ranks among the nation’s worst.
AFP is spending thousands cheering on Thom Tillis’s extreme policies in the Tar Heel State. But while they are celebrating, North Carolina families are suffering.
Background:
Tax Reform Package Cut Taxes By Just $80 For Married Couple With Two Children Earning $40,000 Annually, While Cutting Taxes By Over $2,400 For Married Couple With Two Children Earning $250,000 Annually. According to WRAL, “According to an analysis by the legislature’s nonpartisan staff, taxpayers at both ends of the income spectrum will pay less. For example, a married couple filing jointly with two children who make $40,000 a year will pay $80 less under this tax plan. The same couple filing jointly with two children who make $250,000 will pay $2,434 less.” [WRAL, 7/15/13]
Tax Reform Package Would Cut Taxes By $12,300-$18,800 For A Married Couple With Two Children Earning $1 Million Annually, And Cut Taxes By $78,000 Annually For A Married Couple With Two Children Earning $4 Million Annually. According to the Raleigh News & Observer, “For a married couple with two children making a combined $1 million, the income tax break is between $12,300 and $18,800, a roughly 20 percent cut. The same family making $4 million a year can get a cut up to $78,000, the analysis found. Rep. Paul Luebke, a Durham Democrat, used the figures to show the top 1 percent of taxpayers would proportionally get the biggest income tax break. ‘This is a bill that is helpful if you are millionaire; it does not help you if you are in the middle class,’ Luebke said.” [Raleigh News & Observer, 7/16/13]
Greenville Daily Reflector Editorial: Tax Reform Plan Produced “A Massive Tax Break That Benefits The Wealthiest Individuals And North Carolina’s Corporate Citizens Above All Others.” In an editorial, the Greenville Daily Reflector wrote: “Most North Carolina voters who elevated the Republican Party to a legislative majority and elected Pat McCrory governor sought changes to the state’s tax code. They may be disappointed, however, to see an attempt at real reform of an antiquated tax system was jettisoned in favor of a massive tax break that benefits the wealthiest individuals and North Carolina’s corporate citizens above all others.” [Greenville Daily Reflector, 7/24/13]
Tax Reform Package Preserved $1,500 Sales Tax Cap On Private Yachts And Jets, At $10 Million Annual Cost To The State. According to the Raleigh News & Observer, “But still on the books is a $1,500 cap on the sales tax for a yacht or a jet, a provision that costs the state $10 million a year in lost revenue. […] The months-long debate over overhauling the state tax system has produced a mixed bag of loophole closures, creating winners and losers in a bill that Republicans declared would create a level playing field. A basic principle of tax reform is to make the tax code fair for everyone while raising just enough revenue to pay for government services. Under the legislation sent Thursday to Gov. Pat McCrory, who is expected to sign it, some taxpayers would see relief in the form of lower income tax rates and higher standard deductions. But the bill only cuts 48 of the more than 300 tax breaks on the books, and lawmakers are banking on strong economic growth in subsequent years to make up for hundreds of millions of dollars in revenue losses from cutting income taxes.” [Raleigh News & Observer, 7/18/13]
Tax Reform Package Preserved Corporate Tax Exemption For Country Clubs, At $600,000 Annual Cost To The State. According to the Raleigh News & Observer, “Country clubs and other recreational nonprofits keep their exemption from the corporate income tax, a tax break worth a combined $600,000 a year. […] The months-long debate over overhauling the state tax system has produced a mixed bag of loophole closures, creating winners and losers in a bill that Republicans declared would create a level playing field. A basic principle of tax reform is to make the tax code fair for everyone while raising just enough revenue to pay for government services. Under the legislation sent Thursday to Gov. Pat McCrory, who is expected to sign it, some taxpayers would see relief in the form of lower income tax rates and higher standard deductions. But the bill only cuts 48 of the more than 300 tax breaks on the books, and lawmakers are banking on strong economic growth in subsequent years to make up for hundreds of millions of dollars in revenue losses from cutting income taxes.” [Raleigh News & Observer, 7/18/13]
Tax Reform Package Would Raise Taxes On “Senior Citizens On Retirement Income And Small Business Owners.” According to the Raleigh News & Observer, “A few scenarios show that senior citizens on retirement income and small business owners are likely to pay more in income taxes as a result of the legislation.” [Raleigh News & Observer,7/16/13]
Tax Reform Package Would Increase Taxes By $2,700 Annually For A Married Couple With Two Children Earning $65,000 Annually From Small Business Income.According to the Raleigh News & Observer, “Another provision tucked into the bill eliminates a $50,000 income exemption for small business owners. It would lead a married couple with two children making $65,000 to pay $2,700 more in taxes, the legislative analysis showed.” [Raleigh News & Observer, 7/16/13]
Tax Reform Package Eliminated $50,000 Income Exemption For Small Business Owners. According to the Raleigh News & Observer, “Another provision tucked into the bill eliminates a $50,000 income exemption for small business owners. It would lead a married couple with two children making $65,000 to pay $2,700 more in taxes, the legislative analysis showed.” [Raleigh News & Observer, 7/16/13]
Tax Reform Package Made Retirement Income From Private And Public Pensions Subject To State Income Tax, Increasing Tax Revenue By $89 Million Annually.According to the Raleigh News & Observer, “Retirees’ income from private plans or government pensions would now be subject to the income tax, save for a group of retirees and vested employees whose pensions are protected by a roughly 20-year-old court settlement known as the Bailey case. The retirement income break costs the state about $89 million annually.” [Raleigh News & Observer, 7/18/13]
Tax Reform Package Increased Combined Sales Tax On Electricity To 7%. According to the Raleigh News & Observer, “The plan would expand the 4.75 percent state sales tax to some service contracts and, movies and amusements. The sales tax on electricity would increase to a combined 7 percent.” [Raleigh News & Observer, 7/15/13]
Tax Reform Package Increased State Sales Tax On “Movies And Live Performances, Like Concerts.” According to WGHP, “Both houses of the North Carolina General Assembly passed House Bill 998 Tuesday. The bill is also known as the Tax Simplification and Reduction Act, and it’s the result of a compromise by the House, Senate, and Governor Pat McCrory. In a press release, Senator Phil Berger said, ‘Today’s historic vote follows months of hard work and fulfills our most important promise to voters: enacting significant tax reform that makes us competitive for 21st century jobs and returns more money to North Carolina families.’ The bill would eliminate North Carolina’s three-tiered income tax code. Instead, every tax payer would pay a 5.8% income tax. The bill would also lower corporate income taxes while adding new sales taxes on electricity and natural gas as well as movies and live performances, like concerts.” [WGHP, 7/16/13]
Tax Reform Package Eliminated Sales Tax Holidays For School Supplies And Energy-Efficient Appliances. According to the Raleigh News & Observer, “And sales tax holidays for school supplies and energy-efficient appliances would disappear. […] The months-long debate over overhauling the state tax system has produced a mixed bag of loophole closures, creating winners and losers in a bill that Republicans declared would create a level playing field. A basic principle of tax reform is to make the tax code fair for everyone while raising just enough revenue to pay for government services. Under the legislation sent Thursday to Gov. Pat McCrory, who is expected to sign it, some taxpayers would see relief in the form of lower income tax rates and higher standard deductions. But the bill only cuts 48 of the more than 300 tax breaks on the books, and lawmakers are banking on strong economic growth in subsequent years to make up for hundreds of millions of dollars in revenue losses from cutting income taxes.” [Raleigh News & Observer, 7/18/13]
FY 2014 State Budget Cut Education Spending By Nearly $500 Million Over The Next Two Years. According to the Black Mountain News, “The $11.5 billion portion of the state budget set aside for public schools, community colleges and the University of North Carolina system cuts education spending by nearly $260 million this year and another $222 million next year.” [Black Mountain News, 7/23/13]
Raleigh News & Observer Editorial: Tillis Passed State Budget That “Shorts Public Education.” In an editorial, the Raleigh News & Observer wrote: “The tax law set the stage for a state budget approved Wednesday that shorts public education, especially teachers.” [Raleigh News & Observer, 7/24/13]
FY 2014 State Budget Eliminated Teacher Tenure. According to WRAL, “House and Senate leaders announced Sunday that they have reached an agreement on a $20.6 billion state budget that will end teacher tenure and allow taxpayer money to be spent for private school tuition. A final draft of the bill and an accompanying ‘money report’ the provides much of the detail in the budget were posted online late Sunday night. Both chambers have previously passed their own spending plans, but Republican leaders wrangled for weeks to come to a consensus even as the July 1 start of the 2013-2014 fiscal year came and went. […] Both the House and Senate are expected to give the spending plan at least tentative approval on Tuesday.” [WRAL, 7/21/13]
State Budget Cut Spending For Teachers’ Assistants By $120 Million, A 21% Budget Cut. According to the Raleigh News & Observer, “Teacher assistants take a hit in the budget released Sunday, which reduces state spending on them by $120 million, or about 21 percent.” [Raleigh News & Observer, 7/21/13]
The FY2012 Budget “Includes Deep Cuts For Agencies Around The State,” Including 13,000 Education Jobs. According to the WCNC Charlotte, “The North Carolina legislature has sent its budget to Governor Bev Perdue’s desk, and it includes deep cuts for agencies around the state, including education. […] The budget cuts roughly 13,000 education jobs statewide, including nearly 9,300 in public schools.” [WCNC, 6/5/11]