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Republican plan would cut income tax, increase services taxed

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WILMINGTON, NC (WWAY) -- Big changes could be coming in the way you pay taxes. Senate Republicans are pushing for what would be the largest tax reform in the Tar Heel State since the Great Depression.

"Our tax code remains stuck in the 1930s," said Sen. Phil Berger, Senate President Pro Tempore. "Failure to reform our tax code has cost North Carolina. We're standing still while other states move forward."

In an attempt to energize the state's economy senate republicans are introducing a plan they say will reduce income tax rates.

"You may pay a little bit more," Berger said. "Everybody ought to pay something. Everybody ought to be treated fairly. Everybody has a responsibility to help pay for the cost of government."

Opponents of the bill that it shifts the tax burden from the rich to the poor. To help pay for the $1 billion income tax drop the overhaul would increase North Carolina's sales tax base to include more than 100 services ranging from haircuts to attorney fees, making it one of the broadest in the country. Some business owners affected do not like the plan.

"I do not want that," said Leslie Padgett, who owns a salon in Wilmington that would be subject to the proposed tax. "That means we would have to raise our prices, and in this day and time you can't really do that if you want to keep your clientele. They will find somewhere else, or they'll find somewhere a little bit cheaper or stretch out appointments a little bit longer. All of that comes in to effect when you raise a price."

The plan must also get support of House Republicans and Gov. Pat McCrory, who said today he looks forward to reading the plan.

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He's right. North Carolina

He's right. North Carolina has traditionally stood still while other states progressed. The sad thing is that when NC does move, it seems as if it always moves backward. Hope all the Repubs are savoring this moment.

According to Phil Berger,

According to Phil Berger, "You may pay a little bit more,". Take my word for it folks you WILL pay more, a lot more. The personal income tax will be lowered but you'll be taxed on about 100+ services that you weren't taxed on before. From my point of view a tax is a tax whether it is taken directly from my/your paycheck or whether it's paid at the point of sale!!

Get what you voted for

The GOP won the legislature and governorship and those people that voted them in believed their taxes were going to be cut. And they will be, if you're making over a certain income. BUT if you're middle-class or poor...you'll be paying MORE in sales and service taxes!

YEA! It's good to have friends in the General Assembly if you're wealthy!

Ginger

not everyone who voted Republican did so in anticipation of lower taxes.

Many voted in anticipation of spending cuts for entitlement recipients and the state achieiving a deficit free budget and balance.

Why not check and see just how underfunded the state retiree pension and retiree health insurance plans are.

Tom

Oh boy. The Obama admin just released a huge amount of medical billing data regarding HC costs.
I have read lightly about the so called "Charge Masters".
But this is very disturbing to me:
http://www.huffingtonpost.com/2013/05/08/hospital-prices-cost-difference...

Here's the openening two paragraphs:

"When a patient arrives at Bayonne Hospital Center in New Jersey requiring treatment for the respiratory ailment known as COPD, or chronic obstructive pulmonary disease, she faces an official price tag of $99,690.

Less than 30 miles away in the Bronx, N.Y., the Lincoln Medical and Mental Health Center charges only $7,044 for the same treatment, according to a massive federal database of national health care costs made public on Wednesday."

And as far as medicla insurance goes listen to this snip as well:
""The charge masters are totally irrational," Robert Laszewski, a former health insurance company executive who consults for health care companies as president of Alexandria, Va.-based Health Policy and Strategy Associates, wrote in an email to The Huffington Post.

Hospitals used to base prices on health care costs and on the need for profit that would, among other things, enable them to make investments in their facilities, Laszewski explained. "They became the baseline from which the hospitals started," he wrote. But over time, hospitals raised charges in anticipation of negotiating discounts with private health insurance companies while maintaining their revenue streams, he said."

Sounds a little like Harris Teeter raise that price from $1.99 to $2.99 over 3 weeks then run a sale at $2.49.
Sounds like what hospitals are doing to insurance company's
I'll have to read a little more in this one
But I maintain my position that government healthcare (probably along the lines of the Japanese system) would be the BIGGEST benefit the U.S. government could give to businesses to spur our economy.

Pricing in the U.S. is out of control apparently

Vog

C'mon Tom

Proposed budgets have to be balanced - by law.
And I don't care who is in charge things happen that can throw budgets out of balance.
I agree that entitlement reform is needed but MOST of that would come from the Federal side.
The state health plan is a big concern
But for pensions funding?
NC ranks 7th according to this:

http://www.chicagobusiness.com/article/20130110/NEWS07/130109847/pension...

(You nay have to click on NC on the map)

We have done well under Democratic Treasurers since 1977(?) It will be interesting to see how Cowell does with new investment leeway recently granted by the Legislature.
The state pension appears to be strong

Vog

I'm concerned

This is a blatent attempt to shift some of the burden of the responsibility for increasing government revenues onto the backs of the people who have the least ability to pay. What makes this shift so obscene is that it's the very same people who have the greatest ability to pay that are the very same people who're changing the equation to their own personal financial advantage. They're the ones making the rules. That smacks of personal greed.

There's an old saying: "He who has the gold makes the rules." Just because it's an old saying doesn't make it right.

Maybe I'm just a dinosaur in a new age. Maybe morality and compassion no longer have a place in a new society where it's more important to be seen by many rather than to actually accomplish anything in private. If that's the case, becoming obsolete doesn't seem like such a bad thing.

you SHOULD be concerned

Tax rates on income in NC?
6%/7%/7.5%
New income tax rates?
0-4.5%

On the face of it that's a good thing but like all things we'll have to wait and see.......

Current corporate tax in NC?
6.9%
Proposed corporate tax?
6.0%
THe same as GA and VA, higher than SC. I thought they were going for lowest in the region?

Current Franchise tax?
$1.5/1000
Proposed
$1.35/1000

Current "Combined sales tax"?
6.75%
Proposed Combined sales tax
6.5%

What is very upsetting to some is that the food tax is going way up from 2.0% to 6.0% or 6.5%. Funny how Berger did not list this on his site:

http://nctaxcut.com/create-jobs/

And when you couple that with the hundreds of services that will now be subjected to the tax you can see that this is going to hurt the middle and lower income earners more.
Our Legislative leadership followed the old line of lower taxes create jobs. No they don't - they just make it less risky to hire. But increasing demand does. Higher taxes don't kill jobs either.
The late 40s and 50s were marked by the highest taxes we've ever had yet represent the highest period of job creation - why? Because GIs were coming out of the service with $ in their pockets and they spent it on homes and cars - driving demand.
It was also period of 80% tax rates on upper incomes. But our friends still cling to that outdated economic theory. It's kinda like the austerity thing. That theory said that when debt approaches 90% of GDP it is no longer sustainable. All a lie - and all based on a very simple math error that was recently discovered. Now we learn there's even more errors in that study. The authors have even admitted wrong doing. Yet many cling still cling to it.
I like having more money but its clear that I will be paying more - especially for food.
I think will slow down the NC economy but I hope I am wrong.
Vog

You're not obsolete

You've become wise with age.

(I must be a friggin genius)
Well, maybe not...........I know I've become very opinionated

Vog

Vog

You're far from a friggin' genius, (unless being a legend in your own mind counts).

I certainly hope I'm getting wiser .........

....... because these new tax proposals feel really wrong to me on many levels.

Well chef

I really thought they'd do better for corporations.
Instead they slashed upper income taxes BIG TIME.
And cut lower income taxes a little
But then they skewered especially the little guy by taxing everything they buy and the services they may need. Sure you don't need an attorney every day
But haircuts? Tax preparers? Car repair labor? Groceries?

I STILL Think they are going to really hurt housing - and prices won't drop enough to offset the costs imposed on potential buyers and sellers.

This is my fear about the Fair Tax - that it will be too one sided. And it will be FULL of exceptions and codicils and work arounds.

Vog

Sounds terrible more money

Sounds terrible more money in my paycheck...
Because I go to my attorney at least once every two weeks
Buy and sell my house every two weeks
Get my haircut every two weeks....
But only get paid once every couple of years
Do you people listen to what you say before you comment???

"Sounds terrible more money in my paycheck..."? Really?

Wow Yessirree! Another 30 clams in the paycheck and another 100 NEW TAXABLE services to pay out an additional 130 clams in ADDITIONAL taxes never before seen. The items you mention are but an insignificant few of the additional 100 items and services that are currently untaxed. The labor portion of services are currently not taxed to the consumer as that labor is ALREADY being taxed. Doubling it up on taxes is good for you?

So they want to "reduce" the income tax rate and tax an additional 100 items (that nobody has the list of) and make us think we're getting one helluva deal? Right... Lookah heah Kilroy, ANYTIME that "ball and cup game" combined with "smoke & mirrors" comes around, especially involving taxation, you can bet your whistle it is getting ready to get poked right to the taxpayer in a very obcure place void of sunlight!

Do YOU ever READ before you post here?

Tax man

The devil is in the details...

Vog

More taxes that they aren't telling you about! And don't want...

...you to know!

Taxes on selling your home.
Taxes on buying your home.
Taxes on the real estate agents fee.
Taxes on the lawyer fees.
Loss of tax deduction for mortgage interest.
Loss of depreciation.

These are but a few! There are many...many more!

Really folks. Do you REALLY believe the State would try to do this to give the citizens a "tax break"? Of course not! It's designed to rake in billions more dollars...OUT OF OUR POCKETS...AGAIN!

Good Lord . . .

PLEASE don't raise any more taxes on food or gas!!! I'm barely hanging in there as it is . . .

Where's Thom?

"The proposal would add another 100 or so services to the list. They include all kinds of repairs, personal services like haircuts and massages and professional services like those attorneys provide."

>I'm surprised we haven't heard Goolsby howl about this...since he's an attorney.

Why

would he howl? He would just jack his fee up.

You'll hear

More complaints from RE agents and home builders.
On the surface it would appear as though buying a home just got a lot more expensive

Vog

Vog

the Feds are talking about elimination of the home owner interest deduction. If that happens, you may see housing prices drop as many potential home buyers will lose the biggie from their annual Schedule A.

Actually

The real estate market would crash along with home prices if the Feds eliminate the interest deduction ALONG WITH what we are proposing here.

The RE people have been saying for months they oppose this and they got nowhere.
And they do spread some cash around Raleigh.
I am beginning to think we may have a rouge Legislature here Tom.
It will be interesting to see how McCrory handles this one.

Vog

Tom

That would be a self inflicted wound IMHO.
New housing construction would stop -lay offs would happen, and under the new rules they'd have 20 to 26 weeks.
That would not be a good situation.
Spending would decrease and revenues would decline, making the budget go out of whack.......

I hope I'm wrong

Vog

Quite Correct

on the ramifications. And I too hope you are wrong.

But, the White House occupant and his merry band of thieves, Prince Harry and Princess Nancy, have made no secret this is mandatory if they are to continue with entitlement spending.

He's got nothing to lose; he will not be up for re-election.

The other 2 have some concerns or should have.

Watch what happens after the mid tem election when Pelosi is re-elected.

They will couple this with even more drastic immigration reforms.

Sounds like a royal Soap Opera

as the stomach turns..........

Vog

Service tax will just

Service tax will just incourage more people to pay with cash. To avoid taxes.