With all of the crazy ideas about taxes and tax cuts flying around these days, would you be surprised if I told you there was a proven, efficient and progressive method of rewarding hard-working folks for sticking with the low-wage jobs that are otherwise pretty thankless? Well then, allow me to introduce the Earned Income Tax Credit.
The state Earned Income Tax Credit (EITC) is available to low and moderate-income workers in North Carolina and is calculated at 5 percent of the federal EITC. It is designed to encourage and reward work, as well as offset the total tax contributions of these workers.
Taxpayers who receive the state EITC are paying more in total state and local taxes than their wealthier neighbors. For example, those in the bottom three-fifths pay at or near 9.5 percent of their annual income in state and local taxes. By contrast, the wealthiest North Carolinians, whose incomes put them in the top 1 percent of all households, pay under 7 percent of their income in state and local taxes.
The EITC evens the playing field just a little and gives working families a chance to get ahead. Sounds like a good idea, no?