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As federal lawmakers in Washington D.C. prepare to extend tax benefits for the wealthiest Americans, North Carolina finds itself at a financial and moral crossroads. For over a decade, the state’s flat income tax system has disproportionately favored high earners, widening the gap between the wealthy and those struggling to afford health care, housing, and child care.
Now, the stakes are even higher. If proposed changes at the federal level are enacted, hundreds of thousands of North Carolinians could lose access to Medicaid and food assistance. Yet, instead of counterbalancing these risks, state legislators are doubling down on policies that exacerbate inequality.
In their most recent budget plan, North Carolina Senate leaders propose slashing the personal income tax rate to 1.99% by 2031 — a move that would deliver nearly $65,000 in average annual tax cuts to millionaires, compared to just $1,200 for non-millionaires, according to the Institute on Taxation and Economic Policy. When layered on top of federal tax breaks, the cumulative benefit to the top 1% becomes not just generous — but extreme.
This approach fails both economically and ethically. A tax system should be designed not only to fund essential public services but also to reflect the shared responsibilities of a just society.
A Pragmatic Solution: The Millionaire’s Tax
One viable, revenue-positive alternative is the introduction of a 7% state income tax rate on earnings over $1 million — a model still more modest than the state’s pre-2013 graduated tax structure. This single policy shift could generate over $980 million annually, funds that could fortify vital programs like Medicaid, public housing, and education.
Crucially, such a graduated tax would not impact the vast majority of North Carolinians. Even those earning over $1 million would continue paying the lower flat rate on their first million — maintaining a fair, balanced progression aligned with modern economic realities.
The Bigger Picture: Federal Retreat, State Responsibility
With the federal government increasingly abdicating its role in ensuring economic stability, the pressure now falls squarely on states. Tax equity is no longer just a budgetary concern — it’s a frontline defense against poverty, public health crises, and social division.
If North Carolina continues down the path of tax-cut orthodoxy, the long-term cost will be borne by families, communities, and ultimately the economy itself. But if lawmakers act with foresight and courage, a millionaire’s tax could serve as the foundation for a more resilient, equitable state.
Conclusion
In this critical moment, North Carolina doesn’t need another tax break for the wealthy — it needs leadership that prioritizes the well-being of all residents. A fair tax system is not just an accounting tool. It is a reflection of a state’s values. The time to act is now.
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