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Didn't the governor at one point promise that any tax reform would be revenue neutral?
Counties and cities will have to make up the difference locally with either their own revenue increases or by cutting their services and expenditures or by a combination of both. I suspect that the middle and upper incomes will push back locally to not have local taxes raised which will result in many cuts to programs, services, etc. at the local level. If that happens, I expect parks and recreation departments to suffer, public amenities to suffer, local programs to suffer, etc. Or, we end up with a pay as you go model where fees will be attached to many things that are now free/funded through taxes.
What I can't wait for is the inevitable "blaming of the Democrats" that will come from increased fees, etc. by many who are not paying attention to what's happening now.
In the end, the people who will really suffer will be the small rural communities across the state that don't have the ability to raise revenue like the wealthier communities and counties. The irony will be that these rural communities are often the communities that put the current government in power.
Sounds like my state. Welcome the the Midwest state with a Nazi governor way of life.
House and Senate leaders released a proposed $20.6 billion budget Sunday night.
The proposal would eliminate teacher tenure, offer compensation to eugenics victims, offer school vouchers, and create a rural economic development division within the commerce department.
Among the items in the compromise listed in a release sent by Senate Pro-Tem Phil Berger’s office Sunday evening include:
- Provides $23.6 million for the Excellent Public Schools Act, which eliminates the traditional teacher tenure system and replaces it with contracts based on job performance.
- Provides $10 million for pay raises for “most effective teachers.”
- Fully funds enrollment growth for K-12 and the UNC system.
- Provides for opportunity scholarships, or school vouchers, for the second year of the budget.
- Restores $33 million in recurring funding for the community college system.
- Directs $12.4 million in lottery money to fund 2,500 additional pre-K program slots.
- Funds a $5-million back-to-work program for more effective job placement services.
- Allots $1.5 billion for Medicaid overruns.
- Restores funding for 69 positions in Highway Patrol.
- Adds 22 magistrates and 175 probation and parole offices across the state.
- Supports overhauling the Highway Trust Fund and replace IT systems within the DMV.
The budget increases overall state spending by 2.5 percent, while cutting taxes, the statement read.
The budget increases overall state spending by 2.5 percent, while cutting taxes, the statement read.
Ha! That's a good one...
They are going to increase spending where? From what I read, cities and counties will have to jack up property taxes or local sales taxes to cover a (up to 10%) gap in coming years. Who's getting the extra 2.5%?
This is almost as "good" as the political philosophy that we'll increase revenues by cutting taxes.
Let's wait to see the actual budget - not the sound bites or news clips.
There were lots of budget reductions (FTE and budget reductions) in the March 2013 version (the only one I saw online as of yesterday).
While an earlier Tax Reform version had a standard deduction across all income levels/by type of household AND eliminated itemized deductions it did make two concessions: deduction for mortgage interest + property taxes, and charitable donations. Here it wasn't so "standard". It "assumes" the lower AGI levels live in cheaper houses and don't do much in the area of charitable donations.
For instance: a Married Filing Jointly - No Children (MFJ-NC) household w AGI $40,000: can deduct up to $300 in charitable donations, $1.400 in Mortgage Int + Prop Taxes.
But MFJ-NC w AGI of $250,000: can deduct $6,000 in charitable deductions and $11,000 in Mortgage interest + prop taxes.
So if you are in the $40,000 range and pay 10% tithe, you are SOL - find a cheaper religion. And you need to live in a cheaper house.
Standard???? Flat tax????
Then again, these are old numbers. I am sure our erratic legislature corrected their assumptions and classism. (Why standardize some areas and not others?)
I have been looking at the Carolinas for about a year now as a possible retirement home and so when I saw this I knew I had to post it here. Let's hope the changes made do not hurt the little guys and that no one has to pay more than his/her fair share.
A follow up on this is I sent an email off to retirementliving.com since they have great information on taxes by state. I was wondering if they were going to update it for NC. What I just got back was these two links. They could be helpful.
[CENTER]Lowered Rates and Sales Tax Changes Welcome; More Work Needed
[/CENTER] Washington, D.C., July 23, 2013—Last week, North Carolina legislators passed major tax reform legislation, and Governor Pat McCrory is scheduled to sign the legislation at a ceremony this afternoon. The plan, the subject of spirited debate in the state’s General Assembly, lowers individual and corporate income taxes, abolishes the estate tax, and modestly broadens the sales tax base.
The improvements in the state’s tax code will benefit individual taxpayers as well as business owners, and will make North Carolina a more attractive place for new investment. The simplification of gross receipts taxes and elimination of preferential rates for particular industries will also be a bonus for the state’s economy.
“Charging multiple tax rates on different industries and transactions is non-neutral and adds unnecessary complexity to the tax code,” said Tax Foundation economist Elizabeth Malm. “The expansion of the sales tax base to services is unfortunately far less comprehensive than we originally hoped, but the plan still represents a step forward. We hope that future reform efforts will continue this work.”
The legislation will reduce the income tax from 7.75 percent to 5.75 percent while eliminating carve-outs. It also provides a $7,500 standard deduction, an increase from the state’s existing $3,000 deduction, drops the corporate rate to 5 percent, modestly broadens the sales tax to include some service contracts, and eliminates the state’s estate tax.
“It was a privilege working with lawmakers and policy advocates in North Carolina as they decided how the state’s tax system should best be reformed,” said Tax Foundation Vice President for Legal and State Projects Joseph Henchman. “The Tax Foundation’s earliest work, stretching back to the late 1930s, involved helping taxpayers at the local and state levels who were working on ways to improve the tax systems where they lived. Several decades later, that work continues.”
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102
Last edited by oldsoldier1976; 07-23-2013 at 11:53 AM..
Reason: update information received
From an article about the tax reform posted on the WRAL website:
"For example, a married couple filing jointly with two children who make $40,000 a year will pay $80 less under this tax plan. The same couple filing jointly with two children who make $250,000 will pay $2,434 less."
A couple making 40K a year gets $80 while a couple making 250K gets $2434? In effect, if you make 6+ times that of a 40K household, your tax reduction is more than 30 times larger.
Look at it from the flip side: a 5.8% tax rate (assuming no deductions / adjustments) on a couple making $40k means that they are paying $2320 in taxes. The couple making $250k per year will pay $14,500 in taxes.
Quote:
Originally Posted by rnc2mbfl
This is so obvious that tax reform is all about putting more money in the pockets of our wealthiest citizens.
To play devil's advocate, that couple making $250k per year is also likely spending a lot more money in the community compared to that couple making $40k, which also has an economic impact.
I moved here from VA which had a 5-something percent state income tax, much lower gas taxes, considerably lower utility costs,comparable real estate/property taxes, and then moved here where I was hit by the higher taxes. In looking at the unemployment rates and so forth, seems VA is doing better than NC. I am not a "numbers" junkie and haven't done a lot of research into the comparisons between NC and VA, but can someone explain why VA appears to be doing so much better economically than NC with lower taxes? I am well aware of the No. VA area and all that goes with it, but they are paying the lower taxes too. Can anyone explain why NC needed to be assessing 2% more than VA?
The lack of Washington DC and the high paying jobs and gov't contracts.
Large amounts of money going through the system in Va. which turns into tax dollars.
Jobs in NC are below average in pay rate meaning less money flow and lower tax dollars.
But what about the high paying NC/Duke/Research Triangle jobs flowing into NC. Like I said, there are a lot of Fed Govt employees in NOVA, but these are GS 8s, 9s, 10s, etc and not big income folks like we supposedly have in the RTP. Not buying what you are claiming here yet. Why is VA, which is primarily rural with exception of NOVA and Tidewater (military) doing so much better with lower taxes?
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North Carolina Governor to Sign New Tax Reform Law
