North Carolina Governor Rejects Tax on Taxes

July 28, 2009

A problematic budget and tax increase compromise between North Carolina’s House and Senate has been scuttled following opposition from Gov. Bev Perdue (D) to an across-the-board income tax surtax.

Among other tax increases totalling $990 million, the plan included a tax on taxes: a surtax requiring taxpayers to pay 102% of their taxes owed. Not only does the package, including the surtax, increase tax burdens on North Carolina residents, it also does so in a way that preserves existing distortions and problems with the state’s tax code.

Said the Governor:

Perdue, hinting at a veto, said she told legislative leaders Thursday that she would not support an income tax increase that hit anyone other than the wealthy. “Who in the world thinks, in these trying times for families, you can raise income tax for working families and middle class families?” Perdue said at a hastily called news conference outside the Capitol on Thursday evening.[…]

[Senate Republican Leader Phil] Berger also questioned why Perdue objects to an income tax increase as penalizing working families but supports raising the sales tax.

“Working families pay all those taxes,” Berger said.

Maybe now that legislators are going back to the table, they’ll come up with something better this time. We blogged about the pros and cons of the various proposals here, and we released this news release about it.

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