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@NCCapitol

Prospect of broader NC sales tax raises concerns

Posted April 4, 2013
Updated April 5, 2013

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— Republican legislators have vowed to overhaul North Carolina's tax system this session, and the prospect of applying the sales tax to more things is already generating opposition.

Realtors, for example, have started an online campaign warning of the cost of blanket tax reform.

"Imagine selling your home and being forced to pay an 8 percent tax to the Realtor, an 8 percent tax to the attorney and an 8 percent tax to the appraiser," an online commercial states.

Last year, the state brought in more than $10 billion from personal income taxes, $1 billion in corporate income taxes and $5 billion in sales and use taxes.

Sen. Bob Rucho, R-Mecklenburg, who is leading the tax reform movement, has suggested eliminating state income tax, which would mean sales tax revenue would have to fill the gap.

"In the past, two-thirds of all dollars that were spent went for tangible items – goods. Today, it's two-thirds on services," Rucho said Thursday.

Sales tax, retail receipt Service industries pushing back against sales tax expansion

Ideas have been floated in recent weeks to tax everything from haircuts to auto repairs to legal services.

"There are a lot of entities out there that say, 'I've been given a loophole' or 'I've been given a tax preference, and I expect it because it's mine,'" Rucho said. "Well, guess what, everybody else has to pay."

Chris Fitzsimon, director of the left-leaning N.C. Policy Watch, said he fears that using the sales tax to eliminate income taxes will shift the tax burden in North Carolina to the poorest residents.

"The politics of this are incredibly complicated," Fitzsimon said. "The devil in every piece of legislation is in the details. Here, the devil is overwhelming."

Many people, however, said they welcome the idea of tax reform.

"It's good. I'm a small-government guy," Matt Granberry said.

"It's kind of a fair thing for everyone, instead of just getting taxed for things you don't use," Elaine Park said.

71 Comments

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  • junkmail5 Apr 8, 9:26 a.m.

    Ah, The relentless increases in Taxes at the Federal and State Level.- mike275132

    What's weird is, taxes are LOWER than they've been in generations, and you think there's some "relentless increase" in them.

    Even weirder you think there's a depression going on 5 years, when the recession, which is all we had, ended a few years ago.

  • mike275132 Apr 6, 12:40 p.m.

    Ah, The relentless increases in Taxes at the Federal and State Level.

    And the Bewildered Democrat Sheep continue to wander about unemployed, looking for the next government handout.

    As Year Five of the Depression grinds on.....

  • lovelarvae Apr 5, 4:36 p.m.

    "Those words largely echo what Adam Smith agreed was the best way in a capitalist society to arrange taxes.

    progressively.

    Why do you think you know better than all these guys?" -junkmail5

    Perhaps because in their eyes anything with the word "progressive" in must be bad?

  • goldenosprey Apr 5, 4:24 p.m.

    "
    The only services that I would likely pay taxes on are haircuts. I cut my own grass, fix my own cars, and maintain my own home. It wouldn't bother me in the least."smalldog

    Praise God you are physically able and mechanically adept. And lucky enough not to need a lawyer, healthy enough not to need a doctor and untaxed enough not to need an accountant. Those who aren't will pay through the nose and service providers will see their business drop off.

    Poor people will be around as long as humans inhabit the earth, that is true. It's just that as long as republicans are in power, there will be a whole lot more and they will be a whole lot poorer.

  • rand321 Apr 5, 3:15 p.m.

    it will not only raise the cost of many transactions to individuals, it will become a hidden cost of doing business for companies in NC. Big companies can use lawyers in other states to do their legal work as well as outsource other services.

    for small businesses based in NC, including start ups, their net taxes will GO UP not down. The cost of the new taxes will be included in their various expenses and require them to pay more for basic services thus raising their costs.

    Before changing tax laws to favor big donors, the state shoudl first work to ensure that the structure of state government and operations are effective and efficient for a 21st century environment and more urban state. Not rural pre-computer world of the 1030's.

    Many areas controlled by the state should not be, such as the ABC stores. NC regulates too many things best left to indivduals and communities to control.

    Once they know how much the restructured government needs, then look at the best overall income sys

  • smalldogsrule Apr 5, 3:11 p.m.

    The only services that I would likely pay taxes on are haircuts. I cut my own grass, fix my own cars, and maintain my own home. It wouldn't bother me in the least.

    some counties are already paying close to 8% sales tax on hard goods any way. And, other than bailbondsman, what services are poor people paying for that they genuinely NEED any way???

    Poor people have been around for years. they are going to be around as long as humans inhabit the earth. They will not starve in the street if they have to pay extra to get their nails done.

  • junkmail5 Apr 5, 3:10 p.m.

    besides this Smith guy.... who says paying more in taxes as a percentage is fair?- Mep

    You realize "this smith guy" is the fella who literally wrote the book on capitalism, right?

    If you don't like him though, how bout Thomas Jefferson? Maybe HIM you've heard of?

    This is from a letter he wrote to James Madison (maybe him you know?)

    Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." --Thomas Jefferson to James Madison, 1785.

    Those words largely echo what Adam Smith agreed was the best way in a capitalist society to arrange taxes.

    progressively.

    Why do you think you know better than all these guys?

  • junkmail5 Apr 5, 3:06 p.m.

    Somehow our nation survived for well over 150 years without social services, social security, welfare, medicare, medicaid and a whole lot of other "services".- Mep

    Of course for most of that time most of the US was agrarian, with few really large cities or urban centers, and relatively little major industry.

    Once those things began to change you entered the era of the robber barons and sweatshops until the government stepped in to try and improve things a bit.

    Seeing how poor people use a disproportionate amount of government services- the troll

    what? of course they don't.

    rich people reap HUGE benefits from the government enforcing contracts, infrastructure that supports their businesses, government subsidies of business loans, corporate tax breaks.... benefits WAY WAY larger than one poor guy getting a $9/mo discount on his cell service.

    That the rich get more is econ 101.

    Even Adam Smith admitted the rich ought pay more than their proportionate share of the taxes.

  • bcde Apr 5, 2:51 p.m.

    The way I see it we are paying almost 7% sales tax on 'hard goods' as it is. That is very close to what is being suggested so it shouldn't matter that much. If we didn't have to pay any income tax that is a 6.75 - 7.75% that you don't pay on all your income. If you had to pay an 8% tax (surcharge) on services that you received then you should still come out ahead, as you were paying close to that amount on all your income before. If people want to spend more and have more services then they will have to pay more, but still get to keep what they would have been paying in state income tax. I do think they should keep the non-prepared food tax at 2% as it currently is. Those that are truly poor and can only afford the basics should still come out ahead as they would get to keep their income tax, and wouldn't have an increase on the tax on food. All these 'goods and services' that people keep referring to are nice, but they are not essential to daily life.

  • goldenosprey Apr 5, 2:28 p.m.

    "For all of you complaining about the poor, let me ask you this, Are there no poor people in Alaska,Florida,Nevada,South Dakota,Texas, or Washington???

    None of those states have an income tax. They all (except Alaska) make up their taxes largely from sales taxes." small dog

    Those states have revenue streams NC does not have. I used to live in one of those states. Property taxes were through the roof and you had to pay to enter a public park with next to no facilities.

    I don't want my state to be as backwards as Tennessee (although at the rate we are going with the new GA, Tenn will look downright snooty.)

    The Troll - why don't you move to SE Raleigh or Durham so you can enjoy your tax $ in action more!

    When the workingman sees how much the 'pubs are stealing from him, Jones Street will turn blue again, and not a moment too soon.

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