After rejecting spending cuts in favor of finding a way to raise $990 million in new taxes, and then rejecting base broadening in favor of hiking rates on narrow bases, then rejecting that, the powers-that-be in North Carolina have decided to follow the trend of targeting “millionaires” (now defined as those making $60,000 or more):
That plan places a 2 percent surcharge on individuals making more than $60,000 or couples making more than $100,000. And it places a 3 percent surcharge on individuals making more than $150,000 and couples whose taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. able income is more than $250,000.
For example, a couple earning $250,000 will have to figure out their current tax liability and then pay 103% of it.
Also included in the budget deal is hiking the state sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. rate by 1 percentage point.
More reliance on high-income earners means more volatility, meaning bigger shortfalls down the road.
More on North Carolina here and here.
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