The 2013 North Carolina tax changes shifted the state's tax system to be more regressive. It allowed the state Earned Income Tax Credit to sunset, impacting over 900,000 families including 25,000 in Durham. Higher sales taxes will also hurt low- and moderate-income taxpayers. Additionally, the state revenue loss puts more pressure on local governments to fund services, likely through increased property taxes or fees which tend to be regressive.

1. Tax Fairness in
Durham
MEG WIEHE
STATE TAX POLICY DIRECTOR
INSTITUTE ON TAXATION AND ECONOMIC POLICY (ITEP)
MEG@ITEP.ORG – WWW.ITEP.ORG
919.381.5918

2. Who Pays Taxes in North Carolina?
Distribution of NC’s tax system before the 2013 changes
Taxpayers of all Ages

3. The Impact of the 2013 North Carolina
Tax Changes- A Tax Shift
Average total tax change as a share of income

4. The New Distribution of NC’s Tax System

5. 2013 North Carolina Tax Changes
NC Budget & Tax Center

6. The State EITC was allowed to Sunset
•More than 900,000 North Carolina families
impacted (23% of taxpayers)
• 25,000+ families in Durham stand to lose up to
$276 from this change (21% of Durham taxpayers)
** Taxpayers can still claim the state EITC when they
file their 2013 taxes. The credit is eliminated starting
in 2014.

7. Higher Sales Taxes will also hurt lowand moderate-income taxpayers

8. And, a State Revenue Loss…putting more
pressure on local governments to fund services

9. Revenue Options for Local Govts.
• Property taxes vs. fees
• In general, NC and other states have turned to increased fees as a
means to fund government even while enacting large tax cuts.
Examples:
• Higher university and comm. college tuition
• Court fees
• Vehicle registration fees
• Park fees, etc.
• Like sales and excise taxes, user fees are typically highly regressive,
requiring more as a share of income from low-income households
than wealthy ones.
• Property taxes tend to also be regressive, but less so than most user
fees.

10. Revenue Options for Local Govts.
• Property taxes vs. fees
• In general, NC and other states have turned to increased fees as a
means to fund government even while enacting large tax cuts.
Examples:
• Higher university and comm. college tuition
• Court fees
• Vehicle registration fees
• Park fees, etc.
• Like sales and excise taxes, user fees are typically highly regressive,
requiring more as a share of income from low-income households
than wealthy ones.
• Property taxes tend to also be regressive, but less so than most user
fees.