No, really.
Rob Schofield at NC Policy Watch has a weekly briefing up on a new report from the NC Budget and Tax Center. In 2007, as it turns out, the lowest 20% of households in North Carolina - with an average income of $10,000 - paid about 11% of their income in state and local taxes. The top 1% of households - with an average income of $970,000 a year - paid about 7% of their income in state and local taxes.
That discrepancy says a lot about North Carolina tax policy. Schofield, for some reason, takes pains to point out taxes aren't as regressive here as they are in other states - which is true, especially when you consider states that don't have income taxes at all, but rather rely entirely on property and sales taxes to raise revenue.
But our state tax system is still regressive - it still relies too heavily on the sales tax, for example, and the sales tax is in turn made even more regressive by the fact that the state doesn't impose it on a number of personal services. And as we're beginning to see in Buncombe County, the property taxes that local governments rely on don't take account of the fact that many of us are "land poor," that is, in possession of land that's valued much more highly than it's worth to the owners - and that imposes a crushing tax burden on the elderly and others with fixed incomes.
The report suggests a number of remedies: making the income tax system more progressive, putting a sales tax on services, and providing tax credits for property taxes paid by those with low incomes. And if we took these steps, we could even up the score, creating a system whereby the poorest and the richest paid an equal portion of their income in taxes. The state would also begin collecting more revenue - enough to start making progress on other pockets of injustice, like our mental health system, or the shortfalls in the affordable housing fund, or the skyrocketing tuitions at our state universities - just to name a very few of the challenges we face.
That would be something, wouldn't it? So let's have that flat tax - as long as the goal is "justice," and not "helping the rich avoid paying their share by ignoring property and sales taxes," who could say no?
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I heard of another way of taxing, which makes the most sense and raises the most money for our public needs without overburdening anyone.
It's called a transaction tax. Every time any US dollars change hands (or move from bank to bank) anywhere in the world, there would be a tiny fraction of tax owed for the privilege of using the dollar. This amount would be less than .25%. Because it would apply to everything bought, sold, or borrowed/loaned it would garner huge sums of tax for the gov't at a level that did not seriously affect the cost of doing business for any entity.
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