EDITORIAL: On Tax Day, a note about taxes

We hear a lot about taxes this time of year, particularly when there’s an election on the horizon. So it’s as good a time as any to lay down some unassailable tax facts for beginners and advanced students alike.

Nobody likes paying taxes! Yet the fact remains that this is how we pay for everything we do as a community and as a nation: garbage and leaf collection, roads, sidewalks, the entire criminal-justice system, public water, public housing, public schools, public utilities, parks, Social Security, bridges, tunnels, foreign aid, elections and a massive military infrastructure, to name a few.

The money comes from state and federal personal income taxes, as well as corporate income taxes, and those incremental taxes that get us all, like sales taxes, estate taxes, payroll taxes, property and vehicle taxes and many, many other avenues. And so everyone pays taxes in one way or another — yes, even immigrants! And I’ll say it again: No one likes them!

But another hard fact is that we all benefit from these expenditures. No American businesses could exist without the internet — invented by the government with public dollars — highways and roads, a workforce educated primarily in public schools, the power grid or the US Post Office. Literally everything that Congress does is paid for with taxpayer money. And even if you don’t directly benefit personally from government spending — like, say, someone without kids whose tax money goes towards public schools — you still benefit indirectly because there aren’t tens of thousands of illiterate children roaming your street every day with nowhere to go and nothing to do.

In North Carolina, we have been running a grand experiment in regards to taxes in our state. Since 2013 — the year Republicans gained a majority in the NC Legislature in more than 100 years — we have been whittling down the corporate tax rate from 6.9 percent in 2013 to 2.5 percent as of 2019, with a plan to eliminate it entirely by 2030.

That’s right! Nothing!

Our state budget is currently $30 billion, and like most budgets, it will not be going down in the future. And according to NC State University researchers, corporate income taxes brought in about $1.5 billion in revenue in 2020, revenue we now do without.

To make up the shortfall from corporate income-tax revenue, one might think that the burden then shifts onto personal income taxes. But not in NC! Our current personal income-tax rate is about 4.75 percent, dropped from a high of 7 percent in 2010, with plans to lower it further, to 3.9 percent, over the next couple years.

Which is great, because we all hate taxes, right?

Yet, the needs of North Carolinians from their government remain unchanged. They’re growing, actually — in 2023 we were the fifth-fastest-growing state in the nation, adding more than 139,000 people that year.

It should all come to a head over the next five years, when the NC General Assembly’s Fiscal Research Center predicts that we will be running a budget shortfall of about $1.9 billion, and by 2030 more than $2.5 billion.

That, friends, is what is known as a fiscal cliff. Don’t say we didn’t warn you.