@NCCapitol

@NCCapitol

N.C. House set to vote on tax reforms

Posted June 6, 2013

— State House lawmakers are expected to vote Friday on their chamber's version of tax reform. 

House Bill 998, sponsored by Rep. David Lewis, R-Harnett, would lower personal and corporate income taxes, but would expand sales taxes to labor charges, delivery and installation, electric bills and movie tickets. It was approved Thursday afternoon by the House Appropriations committee.

Money generic House, Senate tax plans compared

"Under this plan, the working families of North Carolina will see more dollars in their pocket, and our state will become more competitive," Lewis told the committee. 

The proposal would cut the state's income tax rates from a three-bracket system of 6 percent, 6.75 percent and 7.75 percent to a flat tax rate of 5.9 percent starting in 2014. The standard deduction would be doubled. 

Corporate taxes would be cut from 6.9 percent currently in annual increments to 5.4 percent by 2018. Franchise taxes would also be cut.  

The original bill would have capped deductions for mortgage interest, property tax and charitable contributions to no more than $25,000 total for a married couple filing jointly. 

After some members of the Republican caucus rebelled, the proposal was amended to allow unlimited deductions for charitable contributions, while keeping the cap on mortgage interest and local property tax deductions at $25,000.

"Based on the research we've done, that accounts for over 97 percent of folks in the state who pay these bills," Lewis said. 

Lewis said removing the cap on charitable deductions increased the cost of the package from $1.2 billion over five years to $1.7 billion. 

Republicans are touting this as a massive tax cut that will stimulate the state's economy and make it more competitive with neighboring states. But Democrats say it's too much money to take out of the state's already pared-down budget. 

"You're making the assumption that all of our programs are perfect as-is and we just need to maintain them." said Rep. Verla Insko, D-Orange. "We are cutting our essential services."

Critics of the bill say it simply shifts the state tax burden from the wealthy to the lower and middle class, who would pay more in sales taxes. 

While the proposal cuts the sales tax rate slightly from 6.75 percent to 6.65 percent (with local governments, not the state, taking the loss in revenue), it would extend the sales tax to service contracts, tailoring and dry cleaning, movie and concert tickets, labor for repairs and maintenance, cleaning charges and delivery and installation of goods.

It would also increase the tax rate on electricity, repealing the 3.22 percent franchise tax and raising the sales tax from 3 percent to 6.65 percent instead.   

The House version would not change the current 2 percent sales tax on groceries, and would not add sales tax to prescription drugs.  

It also cuts only two of the state's hundreds of tax loopholes: the Energy Star tax holiday and an exemption for nutritional supplements sold by chiropractors.  

51 Comments

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  • hiddentreasurescruecds Jun 7, 2013

    NCGOP = BIG Government & MORE Taxes.

    Somehow I don't remember them running on big government and raising taxes on 90% of the state.

  • tayled Jun 7, 2013

    In short, this budge proposal needs to be filed under File 13 and start again.

  • tayled Jun 7, 2013

    The housing market will suffer because of all the fees that will be taxed. Anyone who has ever bought or sold a house knows all too well how those fees can add up without the added tax on them. The already overpriced theaters will now have to raise their ticket prices to cover the new fees there, that will pretty much kill off that industry. People will be more reluctant to get their cars serviced because of the new fees, see where this is going?

  • tayled Jun 7, 2013

    Let's see now, we lower our tax rate,...but then we literally pay tax on every service that we need after that. Doesn't sound like much of a tax cut to me. Not to mention all of the NC industries that the tax on services will kill.

  • arfamr1008 Jun 7, 2013

    The greedy bigot right wing conservatives will take away important social programs from the poor and give tax breaks to the rich. North Carolina need to recall all the right wing conservatives in General Assembly, State House, Governor,etc.

    Proud Liberal

    lol. please read the article before commenting so you don't sound so ignorant next time.

  • uragoner2 Jun 7, 2013

    Looks like corporations are getting a tax break, while everyone else is getting a huge tax hike ! Electric bills, labor charges. Talking about less taxes hypocrisy !

  • corey3rd2 Jun 7, 2013

    There's reforming the tax code and then there's Rich People's Welfare. How much money is Art Pope going to keep from all these reforms? Doesn't seem like they're taxing anything he likes.

  • ckblackm Jun 6, 2013

    Just get rid of all the loopholes.. and do a flat/fair tax.

  • ckblackm Jun 6, 2013

    "LOL... did you know conservatives a far more generous, give more to churches and charity, and even pay more in taxes than liberals." -- mep

    Source?

  • larlar515 Jun 6, 2013

    MEP
    Your comments are embarrassing. "We do Pay teachers and state workers a desent wage" state workers have had their salaries frozen for years while other private and government jobs have been given substantial raises. It has been an all out assault on state workers in NC. NC may not have a teacher shortage now but the wave is coming. What high school graduate would take out $80,000 in Ed loans (the cost to attend NCState for 4 years) for a job that starts and has been stuck on 30k a year? Leaving this state would boost teacher pay by at lease 6 grand (VA) and even as high as 17 a year(GA). (Think life time earnings here)
    Currently the education system is being propt by teachers in the later part of their career. They have started to leave and are taking many young teachers with them. Enjoy your savings, cause the time to pay up is coming.
    Unfortunately the effects of the policies you support will be felt in a decade not in1 or even 2 legislative years.
    Nearsighted policies

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