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Gov. Easley To Address State At 7 P.M., Will Propose Tax Increase

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RALEIGH — Gov. Mike Easley will address the state of North Carolina Thursday night and in his seven-minute address, he will call for a 1-cent increase in the state sales tax. To lessen the impact on lower income groups, he will propose several off-setting measures.

Some think a tax raise is a good idea. Karen Frieland bought more than $80 worth of merchandise at the Cary Target.

"I think on general merchandise, that increase is okay," Frieland said.

Easley wants to buffer the tax hike by ending the marriage penalty in the tax code, increasing the child tax credit, and introducing an earned income tax credit.

The North Carolina Budget and Tax Center does not favor a tax increase, but prepared a report saying that most families would pay no more than an extra $100 per year if anything extra at all.

"The bottom line is that the median taxpayer is paying about $70 more a year, and there is around a $600 increase on our very highest tax payers," said policy analyst Kim Cartron.

Dan Gerlach, an analyst at the center, estimates that Easley's plan would mean a tax cut of $19 a year for taxpayers who make $15,000 to $26,000; an increase of $70 for those who make $26,001 to $41,000; an increase of $89 for those who make 41,001 to 67,000; an increase of $141 for those who make $67,001 to $133,000; an increase of $215 for those who make $133,001 to $336,000; and an increase of $634 for those who make more than $336,000, according to the Winston-Salem Journal.

The John Locke Foundation says a higher sales tax will have hidden costs, hitting lower and middle-income families.

"You take 10 families, all of which make less than $40,000 a year. All of them might get a net tax cut from the Gov. Easley's plan, but a couple of them might lose their job," said John Hood of the Foundation.

Both the governor's speech and the Republican response will air on WRAL-TV tonight beginning at 7 p.m. Journalists from around the state will also discuss the speeches.


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