Local Politics

Who's affected by income tax surcharge?

Posted July 31, 2009

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— Lawmakers say the proposed income tax surcharge that they have included in this year's budget plan wouldn't affect 87 percent of North Carolina taxpayers, but who would have to pay it?

The extra charge is based on taxable income in North Carolina – the income after all exemptions and deductions are figured in on the annual D-400 tax form. Individuals whose taxable income is less than $60,000 and couples whose taxable income is less than $100,000 wouldn't be affected by the proposed surcharge.

Money generic, dollars Proposed income tax surcharge explained

Individuals whose taxable income is between $60,000 and $150,000 and couples whose taxable income is between $100,000 and $250,000 would have to pay a 2 percent surcharge under the plan. Individuals and couples with taxable incomes above $150,000 and $250,000, respectively, would face a 3 percent surcharge.

The surcharge would be calculated on total tax liability, including withholding taxes that have been paid throughout the year and any quarterly estimated tax payments that have been made.

For example, an individual with a taxable income of $70,000 who owes $4,900 in state income taxes would have to pay an extra $98 for the 2 percent surcharge. If the taxpayer had already had more than that withheld from his or her paychecks throughout the year, the surcharge would mean a smaller tax refund.

All businesses would have to pay a 3 percent surcharge on their annual tax liability, regardless of their revenue or profitability.

Lawmakers say the surcharge would raise $210 million toward erasing a projected $4.6 billion deficit. It and a one-cent increase to the sales tax rate that lawmakers have also proposed would end after two years.

28 Comments

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  • dreitzlerjunk Aug 5, 2009

    Phew...it's on tax liability not income. But still...when will these guys learn to stop spending so much money.

  • dreitzlerjunk Aug 5, 2009

    The surcharge is ridiculous! A couple making $99,999 do not pay anything extra. A couple making $100,000 have to pay $2,000 extra. That's just crazy.

    And...I laugh at the "temporary" sales tax increase.

  • Bendal1 Aug 3, 2009

    kmb064,

    So do you bring your own pencils and paper to your place of work? How about bringing your own toilet paper while you're so eager to do the same to us state employees?

    My dad still lives in TN and while they don't have a state income tax, property taxes are high and every county and town has the authority to impose their own sales tax. Then there's a meals tax on restaurant meals (to get those tourist dollars going to the now-gone Opryland), hotel room tax, etc. Basically they tax everything to avoid starting an income tax.

    Meanwhile, the state dumps a lot of programs onto the counties to fund, meaning many of them don't fund anything at all, including road maintenance on local roads. We always knew when we crossed a county line into a poor county; the road surface became full of potholes and dangerously narrow.

  • thewayitis Jul 31, 2009

    Time to stop buying stuff and living off the land...

  • unaffiliated_voter Jul 31, 2009

    "I think it's time to move to Tennessee. They don't have an income tax."

    But their sales tax is higher - 7% for the state and up to 2.75% for local. I think the tax on food is only 1% less than that, so that's considerably higher than NC.

    Also, while Tennessee doesn't tax earned income, pensions, etc., they do have a tax (6% I think) on stock dividends, bond interest, etc. I'm not sure what the property tax rates are there - they could be higher than here also.

    Though it's a lower tax state for some people, there are probably some (perhaps retirees with relatively low income, mostly from dividends/interest, and spending more than they earn) that would pay more there than here.

  • PackFan82 Jul 31, 2009

    The best thing the NC (and Federal) Government could do is focus on putting all the unemployed back to work. More workers will raise the tax basis. If they find jobs, your money will come.

  • kmb0694 Jul 31, 2009

    "I still don't get it. Why is it a surcharge and not a tax? Is it only for those with a certain amount left "unpaid" come filing?"

    The way I read this change is that you will pay the surcharge on your tax liability and if you are due a refund, it will be deducted from your refund.

  • sweetsea Jul 31, 2009

    Perdue, Rand, Basnight et al. caused the states budget problem by spending every dime they could get their hands on and then some. When we had a two billion dollar surplus they called a special session of the legislature to figure out how to spend it. These irresponsible democrats know nothing of reserves and planning ahead. If they run short of money to buy votes with from the various special interest groups they simply use working taxpayers like an ATM machine to get the money. That is what this is. Insert the state's ATM card in the taxpayer's behinds and out comes the cash. Perdue was knee deep in the budget process for the past 20 years. Now the chickens are coming home to roost.

  • kmb0694 Jul 31, 2009

    "Centralize purchasing so there is one contract with all of NC government instead of multiple agencies each with their own purchasing departments."

    I have a better idea. All state employees should have to supply their own pens, post-it notes, and paper clips.

  • kmb0694 Jul 31, 2009

    "How about fewer police, schools and schoolteachers."

    Or how about cutting More at Four and stop paying for the welfare babies.

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