Report: NC Lawmakers Leaving Millions on the Table
RALEIGH, N.C. – As much as $170 million a year could go a long way when it comes to paying North Carolina's teachers, improving state infrastructure and economic development, but it's money the state passed on when it eliminated the estate tax.
The tax was done away with three years ago, and according to a new report from the Center on Budget and Policy Priorities, North Carolina is missing out on $100 million to $170 million in revenue for public investments.
"It contributes to the upside down nature of the state's tax system in which the wealthiest here in the state pay a smaller share of their income in state and local taxes compared to low and middle income taxpayers here in the state," points out Cedric Johnson, a public policy analyst with North Carolina Budget and Tax Center.
Johnson points out the estate tax only impacted inheritances of more than $5.25 million.
The report says 23 people benefited from the cut in the first year.
Supporters of the tax break say it boosts economic growth and investment, but opponents note that states choosing to drop the tax are often facing higher tuition at public colleges, cutbacks in teachers and deteriorating infrastructure.
Nationwide, just over 2 percent of estates pay estate taxes because of the value of the inheritance.
Johnson says even those who benefit from the cut need to think of the bigger picture.
"We all benefit when the state as a whole is doing well and when we're foregoing opportunities to strengthen these public services because we don't have the revenue to do so, in the end, we all hurt," he stresses.
President George W. Bush’s administration phased on the federal estate tax in 2001, and state estate taxes also were eliminated unless states chose to retain the tax.