DALLAS, Nov. 17, 2015 /PRNewswire-USNewswire/ -- North Carolina's income tax reform in 2014 has made the state more competitive with neighboring states South Carolina and Tennessee, according to a new report by National Center for Policy Analysis Senior Fellow Pam Villarreal.
"However, the tax benefits of living in North Carolina compared to Tennessee or South Carolina largely depend on whether you rent or buy your home. Property tax rates can take a bite out of perceived income tax advantages for homeowners," added Villarreal.
Using the NCPA's State Tax Calculator, Villarreal analyzed the impact of North Carolina's switch to a flat tax rate in January of 2014 when compared to two of the state's neighbors.
For renters, after North Carolina's tax reform in 2014:
- A single 30-year old renter making $75,000 a year would have lost only $76 a year by moving from North Carolina to South Carolina, for a loss in lifetime wealth of $7,698.
- However, that same renter would have gained $1,389 a year by moving from North Carolina to Tennessee, for a gain in lifetime wealth of $140,982.
- A 40-year old married couple earning $100,000 a year would gain $392 a year in discretionary income by moving from North Carolina to South Carolina, for a gain in lifetime wealth of $32,385.
- That same couple would gain $1,545 a year by moving from North Carolina to Tennessee, for a lifetime gain of $127,779.
"But even in cases where South Carolina and Tennessee still have an advantage, the tax burden gap between them and North Carolina has become smaller," says Villarreal.
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SOURCE National Center for Policy Analysis