As tax cuts enrich the rich, it’s time for a millionaires’ tax in NC | Opinion

With a state budget deficit looming and state operations starved for funding, it’s time for North Carolina to consider what Republican lawmakers consider unthinkable: taxing the rich.

It would take a simple and justified adjustment to the tax code: Tax income above $1 million at 7%, the state’s constitutional income tax cap. Higher earners would still pay the state’s lower rate on their income under $1 million. The tax would generate about $1 billion annually.

Other states have already imposed or are considering a so-called “millionaires’ tax.” Earlier this month, Maine adopted a 2% tax surcharge on income above $1 million ($1.5 million for couples). On March 30, Washington state, which has no general income tax, adopted a 9.9% tax on personal income over $1 million per year. In 2022, Massachusetts voters approved a state constitutional amendment that added a 4% surtax on income over $1 million. Several other states are weighing similar measures.

Now, two Triangle legislators are preparing to sponsor a millionaire tax for North Carolina. The bill, titled the Fair Share for Public Schools Act, will be proposed by state Sen. Sophia Chitlik, D-Durham, and state Rep. Allen Buansi, D-Orange.

Chitlik said she and Buansi will offer the bill “because we think it’s pretty wild that millionaires are paying the same rates as single mothers juggling three jobs.”

Critics of such taxes say the higher rate will push top earners to leave the state. But Chitlik said that hasn’t been the case in Massachusetts and wouldn’t be the case in North Carolina. “We know that many wealthy people are thrilled to invest in their state,” she said. “Many would welcome this and wouldn’t even notice the difference.”

Buansi said revenue from the tax would support public schools, which are “are at a crisis level when it comes to funding.”

The Fair Share Act is unlikely to even get a hearing in the Republican-controlled legislature, but offering it will send a message that a more equitable tax code could help public schools and underfunded state services.

A millionaires’ tax in North Carolina would still be below the 7.75% rate that the highest earners paid before the Republican-controlled legislature dropped the progressive two-tiered tax rate in favor of a flat tax in 2013. The flat tax began at 5.8%, has dropped to 3.99% today, and could fall to 2.99% in 2028, depending on revenue triggers.

Flattening and cutting the tax rate has resulted in a massive shift in tax savings, mostly benefiting the wealthy. President Donald Trump’s tax cuts and their extension in the “one big beautiful bill” has increased the windfall for North Carolina’s highest earners.

Alexandra Sirota, executive director of the nonprofit NC Budget & Tax Center, outlined the impact of the tax changes in a blog post last December.

“In total, state and federal tax cuts since 2018 for the richest 1 percent of North Carolinians alone have been enormous,” she wrote. “The richest 1 percent in North Carolina — whose average incomes approach $2 million—will pay $4.9 billion less in taxes in 2026 than they would have under tax policies in place before cuts enacted by Congress and the North Carolina General Assembly since 2018.”

That $4.9 billion, Sirota noted, is enough to fund the entire UNC System for a year, or cover most of the state’s contribution to the Medicaid program.

The tax cuts are widening the gap between middle-income earners and the top 1 percent. An analysis by the Office of State Budget and Management shows how severe the inequity would be should today’s 3.99% tax rate drop to 3.49% in 2027, as anticipated by state law. Those with incomes between $78,000 and $144,000 would save $352. The top 1% of earners – $764,000 and above – would save $8,095.

Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, said in a news release about Washington state’s new millionaires’ tax, “Inequality is at a historic high and billionaires are walking away with ever-larger shares of our country’s collective wealth. With those in charge at the federal level passing policies that only make this worse, it is incumbent upon states to come up with solutions.”

Of course, Republican legislative leaders don’t see a growing income gap as a problem. They see it as an accomplishment — the richer the rich, the more to trickle down.

That hasn’t happened since President Reagan embraced the idea and kicked off a steady growth in income inequality. Now, it’s soaring. Ten years ago, the Forbes list showed 540 billionaires. Today it’s 989. In 2016, Forbes listed three billionaires in North Carolina. Today there are 11.

If Democrats gain control of the legislature — and the way it’s going, that may yet happen by 2028 — their first priority should be to stop the tax giveaway to those who need it the least. Let North Carolina’s multi-millionaires and billionaires give a little more back to the state that has given them so much.

Associate opinion editor Ned Barnett can be reached at 919-404-7583, or nbarnett@newsobserver.com

This story was originally published April 26, 2026 at 4:30 AM with the headline "As tax cuts enrich the rich, it’s time for a millionaires’ tax in NC | Opinion."