(The Center Square) – Taxpayers in North Carolina will face an average tax increase of $2,382 if the 2017 Tax Cuts and Jobs Act expires at the end of the year, says the National Taxpayers Union Foundation.
Results of analysis were released Thursday morning by the nonprofit organization billing itself a “nonpartisan research and educational affiliate of the National Taxpayers Union.” Its four state neighbors were similar, with South Carolina lower ($2,319) and higher averages in Virginia ($2,787), Georgia ($2,680) and Tennessee ($2,660).
The Tax Cuts and Jobs Act of eight years ago was a significant update to individual and business taxes in the federal tax code. According to the Tax Foundation, it was considered pro-growth reform with an estimate to reduce federal revenue by $1.47 trillion over a decade.
Should no action be taken before Jan. 1 and the act expire, the federal standard deduction would be halved; the federal child tax credit would decrease; higher federal tax brackets would return; the federal estate tax threshold will be lower; and some business tax benefits will be gone.
The foundation, in summarizing the impact on North Carolina business expensing, says the state conforms to Section 168(k). This means “only 60% expensing for business investments this year and less in future years. State policymakers could adopt 100% full expensing, particularly since the state conforms to the Section 163(j) limit on interest expense and the two provisions were meant to work together.”
The foundation says business net operation loss treatment policies in the state “are less generous than the federal government and impose compliance costs due to lack of synchronization with the federal code and are uncompetitive with most other states.”
The National Taxpayers Union Foundation also says lawmakers “should at least be conscious of any retroactive provisions when selecting their date of fixed conformity.” North Carolina is among 21 states conforming to the federal income tax base “only as of a certain date” rather than automatically matching federal tax code changes – meaning definitions, calculations or rules.
The foundation said nationally the average filer will see taxes raised $2,955. It estimates an increase for 62% of Americans. The biggest average increases by state are in Massachusetts ($4,848), Washington ($4,567) and Wyoming ($4,493) and the lowest are in West Virginia ($1,423), Mississippi ($1,570) and Kentucky ($1,715).
Individual wages, nationally, are expected to go down 0.5%, reducing economic growth by 1.1% over 10 years.
