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The furious tax spin from the right

Chris Fitzsimon NC Policy Watch

January 22, 2014

The right-wing spin machines have been in overdrive lately, primarily trying to convince people of two things, that the drop in the state unemployment rate is evidence that the policies of Governor Pat McCrory and the General Assembly are creating jobs, and that most people will pay less in state taxes this year because of the tax package passed last summer.


Neither is true of course. The claims about unemployment have been easily shown to be false. The unemployment rate has fallen because so many people have given up looking for work and are no longer counted as part of the labor force when the unemployment rate is calculated. Fewer people are working in North Carolina than were working last year at this time. There has been no increase in net jobs created.


Economists in North Carolina and beyond have weighed in to make those points and counter the absurd claims about job creation and the so-called Carolina Comeback that McCrory likes to brag about.


Now the push is also on to distort the tax shift passed last summer that gave huge breaks to wealthy individuals and big out of state corporations and raised taxes on most everybody else.


The leading state think tank on the right this week released a deeply flawed analysis of the plan trying to claim that taxes will go down for everybody. There are many problems with the report that are worth exploring in detail, but the most telling part of the analysis is that the author had to reach back to 2011 to find a way to make the numbers work—and even that is misleading.


The reports treats the General Assembly’s decision three years ago to allow a temporary sales tax increase to expire on schedule as a tax cut when it was nothing of the sort. It is true that some Democratic legislators wanted to leave the tax hike in place to avoid deep cuts to education that were ultimately made, but Republicans did not cut the sales tax, they chose not to increase it.


And remarkably, the think-tank’s report does not mention that lawmakers also allowed a surcharge on high income taxpayers to expire too.


If you are going to count the decision to allow a sales tax increase to expire on schedule to measure of the impact of tax changes in the last four years, then you have to include the expiration of the additional taxes on the wealthy too.


But the report simply ignores that decision because it doesn’t support the goal of portraying the tax changes as fair to everybody, when it fact they are Robin Hood in reverse. It is also not clear, as the folks at the N.C. Budget and Tax Center have pointed out, if the report takes into account the expiration of the state Earned Income Tax Credit that helps low-wage workers.


The folks on the Right can spin as hard as they want to, but the facts about the tax changes made last year are clear. Middle and low-income families will pay more and wealthy individuals and out-of-state corporations will pay less.


The staff of the Fiscal Research Division of the General Assembly made that clear again recently with an analysis that showed that a married couple with two children that earns $20,000 a year will see their state taxes increase by $262 while a married couple with two children that earns $250,000 will see their state tax bill decrease by roughly $2,400.


And when the tax plan is fully implemented, state revenues will be reduced by $600 million a year. And that’s the point really. It is not even about tax fairness anyway. The folks on the Right want to cut taxes to shrink the government they loathe. They just don’t want to be accused of punishing the poor and the middle class when they do it. But sorry, the shoe fits.


McCrory no more popular than Obama


The latest survey from Public Policy Polling has some numbers that folks on the right probably aren’t happy to see. More people in North Carolina approve of the job President Obama is doing as president than approve of the job Pat McCrory is doing as governor.


Neither is very popular at the moment—Obama’s approval rating is 40 percent while McCrory’s is at 37 and Obama’s disapproval is higher than McCrory’s—but considering the ads run in the last few months, the numbers are not good news for McCrory and his supporters.


Conservative interest groups have spent hundreds of thousands of dollars attacking Obamacare as part of their strategy to defeat Democratic Senator Kay Hagan. And the shadowy group with close ties to McCrory spent several hundred thousand dollars in the fall running positive ads about the governor featuring McCrory himself touting his accomplishments. And he is still no more popular than the president.


The survey also found strong support for increasing the minimum wage and extending emergency unemployment benefits for people struggling to find a job. That’s not exactly music to the ears of the folks on the right either.


And voters also believe that embattled HHS Secretary Aldona Wos should be replaced, though that doesn’t seem likely to happen. McCrory said recently that he was lucky to have her.


Fitzsimon is the executive director of NC Policy Watch. For more information, visit www.ncpolicywatch.com