Governor Perdue's Proposed Tax Hikes

We learned over the last week how Governor Perdue would propose to raise taxes to remedy the state's budget shortfall. 

She had previously proposed increasing alcohol and cigarette taxes-- and she still wants those jacked upward.  She also is recommending an 1-cent increase in the state sales tax, and extending the sales tax to more items.  These are inherently regressive solutions.

Finally, she is proposing an income tax increase, but only to a very narrow group-- singles earning more than $500,000, and married couples earning more than $1 million.  This would sharply limit the impact of the income tax increase, but it still is not a good idea.  These people create jobs, and they can go elsewhere if they wish.

Red Clay reacts:

For some perspective, a $20.5 B budget for FY 2009-10 would still mark a 29% increase in just 5 years.

A full cent sales tax increase would put North Carolina's total rate at a staggering 7.75% (remember, part of that sales tax is from the 2002 "temporary" taxes that were made permanent). Compare to neighboring Virginia at 5% and South Carolina at 6.8%. Tennessee's is roughly 7.2% - and they don't even tax income!

Such a massive tax hike will kill jobs and hamper North Carolina's economic recovery and undoubtedly hit the poor the hardest. But who cares about that when you have a lot of special interest groups to take care of?

It is a downright shame what this particular group of Democrats in Raleigh has been doing to our state. Just today, North Carolina earned even more national attention because of the awfulness of the fiscal shenanigans that have been taking place in our state capital.  A national website highlights the degree of our state's political folly.  (HT; Stormy)

And the Carolina Journal conducted an interview with Scott Hodge, the president of the Tax Foundation.  The conclusion?  North Carolina is already losing the tax competition with other states.  All the proposed tax increases would put us even further behind.

 

Comments

[Jeffrey Sykes]

Joe: I read that article in CJ over the weekend. It was a very good interview with Scott Hodge.

[Joe Guarino]

Indeed, it was, Jeff. It highlights that we have several levels of tax competition for new jobs-- regional, national and international. And North Carolina no longer has the advantages it had 20-25 years ago. We therefore bleed jobs to other states within our region; to other parts of the country; and of course, to other countries.

And Governor Perdue and the Democrats in the state legislature propose to make the situation worse.