In Fiscal Year (FY) 2011, North Carolina collected $33.7 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average North Carolina taxpayer can afford this level of taxation.
As shown in the charts below, North Carolina’s state and local tax burden (tax collections divided by personal income) was the nineteenth lowest in the nation for FY 2011 at 9.8 percent—or 6.7 percent below the national average of 10.5 percent. North Carolina’s tax burden has grown over time by 35.9 percent to 9.8 percent in FY 2011 from 7.2 percent in FY 1950.
North Carolina’s lower than average state and local tax burden is driven by a low property tax burden (2.5 percent, 40th highest), corporate income tax burden (0.32 percent, 26th highest), and all other taxes burden (1.7 percent, 36th highest). However, North Carolina does have a significant individual income tax burden (2.9 percent, 11th highest) that offsets the other lower taxes.
Fortunately, North Carolina was one of 18 states that cut taxes in 2013, especially the income tax. As a result, North Carolina taxpayers can expect their individual income tax burden and overall tax burden to fall in the coming years.
Note: FY 2012 tax data from the U.S. Census Bureau will not be available until later in 2014 because FY 2012 was part of their comprehensive “Census of Governments” that is done every 5 years (on years ending 2 and 7). Rest assured that Key Policy Data will post the FY 2012 as soon as it becomes available.
J. Scott Moody has nearly 20 years experience as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as the American Conservative Union Foundation, Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.