The state House will consider today a $940 million tax package that would raise the sales tax and increase the income tax on the state’s wealthiest residents in an effort to offset deep budget cuts to education and social services.
House Democrats, who control the chamber, met privately for two hours Monday evening debating whether to balance a $4 billion deficit with cuts alone or to include new taxes. The state deficit has grown to nearly 20 percent of the current budget and balance the budget with cuts alone would set state spending at a level it last adopted in 2006.
The House tax plan will be heard in a key committee this morning. The plan would:
* Raise the sales tax by a quarter-cent.
* Add warranties, installations, repairs and other services to the sales tax rolls.
* Raise the income tax rate from 7.75 pecent to 8.25 percent on residents who make between $200,000 and $500,000 a year.
* For residents who earn more than $500,000 a year, the income tax would jump from 7.75 percent to 8.5 percent.
* Raise the tax on a pack of cigarettes by a quarter.
More after the jump.
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Democrats in the House have been resistent to raising taxes while Senate Democratic leaders and Gov. Beverly Perdue have said the cuts required to avoid new taxes would be crippling to state services such as education. Pedue issued a statement Monday calling on the House to include new taxes in the budget.
The tax increases will need 61 votes to clear the House. Democrats will need most of their 68 members to support the taxes through since Republicans are likely to vote "no."
Rep. Paul Stam, the House minority leader, said the state could roll back spending to 2006 levels without raising taxes.
"I think that we're in a severe recession and the last thing we should do is have people pay more taxes," said Stam, an Apex Republican. "It would be hard for me to imagine more than one person [in the Republican caucus] at most voting for a tax increase."
Comments
Re: House to look at $940m tax hike
June 9, 2009 - 7:08pm — Prototype"In bad times, demand for government services INCREASES while revenue decreases. The government can't meet the demand by laying off workers and cutting services."
The problem as I see it is that government "in the good times" offers "some" services they had no business offering in the first place. Just because government grows to some behemoth level does not mean that it has to maintain that "fat and obese" status.
The "bad times" are here and "some" of this government budget needs serious cuts and some areas need elimination.
I do not accept that since the government offers some services that it must do it forever. If there is anyone out there who believes that every dollar of state expenditure is absolutely necessary.......then their beliefs and mine are quite different.
Income and expenses is pretty much Business 101. I dislike adding more taxes in these "bad times." Seems to me it might make it worse? Some areas of state government could go on a diet..........
Re: House to look at $940m tax hike
June 9, 2009 - 6:58pm — John_BurnsGovernment does not and cannot "run like a small business."
In bad times, demand for a business's product drops, and the business cuts production and decreases its workforce in response.
In bad times, demand for government services INCREASES while revenue decreases. The government can't meet the demand by laying off workers and cutting services.
It's a bad analogy. All you have to do is think about it for one second longer than it takes to say it and you realize it is a bad analogy.
Re: House to look at $940m tax hike
June 9, 2009 - 5:13pm — omg4realI am glad they are finally looking at places to raise taxes and save some of the services the House is proposing to cut. We got into this mess together and we all need to shoulder some of the pain to help us get back on solid ground. You think raising taxes will make the recession worse. If you cut all the services proposed by the House, small businesses across the state will shut done and put more people in the unemployment line versus working and paying taxes. Who's the moron here?
Re: House to look at $940m tax hike
June 9, 2009 - 12:53pm — PrototypeThe state employees are learning about the cuts that the general public has been experiencing. The small businessman must make the cuts because he can't raise prices or put a levy upon his customers.
The NCAE and SEANC can use this as a learning experience. We're supposed to be a classless society without one group having special priveleges not afforded the ordinary worker. To each according to his needs......
I'm for cutting without tax increases. And more cuts. And more cuts. It will make us appreciate what we had. It's time to put a stop to out-of-control spending. We need to save our money to pay off the feds.
Re: House to look at $940m tax hike
June 9, 2009 - 12:08pm — greenswampPender County announced that it would layoff 80 teachers and assistants for next year. The impact will be 30-plus classroom sizes. Ask the children and the parents who are affected by that if they care about NCAE.
Re: House to look at $940m tax hike
June 9, 2009 - 9:30am — piperscotThe Democratic controlled Legislature and Democratic designed budgets have left a $4.6B hole from the previous spending levels. The use of non-recurring funds to fund recurring programs is insane. Overly optimistic economic growth numbers were argued against back in 2007 but to no avail. There was an election coming up, remember? The tax package will never generate the amount of money expected due to using behavior consumption as its base. Purchasing of discretionary goods (cigarettes/alcohol)and services (lawn services/dry cleaning)will drop, lowering the incomes of their providers, therefore the income tax increases won't meet the expected returns. Even if the package did generate $940M, there will still be significant cuts. This move is designed soley to attempt to placate the Democrats biggest fears, the NCAE and SEANC.
Paul
June 9, 2009 - 9:17am — John_BurnsCome on out and propose your cuts. Lay em out there.
Merely calling the other guy a moron is not reasoned policy debate. If you refuse to consider closing the gap with any tax increase whatsoever, then you, as a person who ran for office, have a responsibility to lay out what you would do differently.
And then, you should go look the people your cuts would hurt right in the eye and tell them why you decided it was more important to save me some money than it was to continue to pay for their child's healthcare or their park, or their road, or their music class, or their football uniform, or their math teacher.
Go ahead, big guy. You wanted to be in office. Let's hear what you would do.
And if you come back with "cut waste and pork spending" I'm going to laugh at you and dismiss you for the remainder of your political career as a grandstanding opportunist.
Re: House to look at $940m tax hike
June 9, 2009 - 7:10am — BitterEXdemocratMORE SLAVERY being imposed by the ORIGINAL 'party' of SLAVERY in NC!
MORE CORRUPTION WITHOUT INTERRUPTION!
STRIVE to be SMARTER than the EVIL controlling party of SLAVERY wants you to BE!
Get yourself OFF the government plantation NOW, and figger out how to HIDE every penny of income you can!
DAMN a bunch of NC democrackkks!
Re: House to look at $940m tax hike
June 8, 2009 - 11:45pm — DustinIngallsYeah, Paul, a quarter-cent increase in the sales tax on a $50,000 car would mean the buyer would pay $125 more in taxes. If that makes a difference, that person should not be buying that car.
If anything, an increase in the sales tax and sin taxes would hurt the poor more than the rich. I think adding more taxes for services would be a fairer deal than raising the sales tax because the rich are more likely to employ services like lawn care and housecleaning than are the poor.
Re: House to look at $940m tax hike
June 8, 2009 - 9:46pm — danmanley2299Paul, its called a caucus, your team does it as well, chill out. how did the forum go on Saturday.
Re: House to look at $940m tax hike
June 8, 2009 - 9:27pm — NewDemocrat09I guess Democrats should just shut down the schools, prisons, police force, firefighters, public universities, aid to the poor and unemployed, and just let anarchy take over. I don't believe a 1% income tax increase on the wealthiest citizens amounts to Socialism. I mean why not call it Communism if your attempting to use fear mongering tactics. The sales tax is going up a quarter of a cent. I guess May Day parades are next huh. Tough times call for tough measures. I guess we should just do Reagonomic supply-side "voodoo" economics and still spend the money but slash government revenues and hike the debt and deficit rather than raise taxes, cut programs, and balance the budget. Also Democrats just landed a $1,000,000,0000 deal with Apple to put a data center here and North Carolina has been one of the fastest growing states in the country. We're in the top ten in population, that requires a big budget.
Re: House to look at $940m tax hike
June 8, 2009 - 8:35pm — robdarichPerhpas your mama should look at a 950M tax hike.
by the way, "m" is for milli, "M" is for Mega - does the house really want to raise taxes 940 millidollars? (that's almost a dollar)
Re: House to look at $940m tax hike
June 8, 2009 - 8:02pm — PaulTerrellFirst of all, "Why are the Democrats meeting privately"?
Second of all, "Raising taxes in a recession is moronic, yes I said moronic". Please quote me on that one. I want everyone to know that I said that. This will cause further unemployment and cause people from out of state to go to Myrtle Beach instead of the Outer Banks. North Carolinians will have to spend less due to the higher sales taxes and socialist level income taxes. That wealthy person will not be able to buy that new luxury car or boat. Dang, sorry guys but that will cause umemployment to rise.
The irresponsibility of the Democratic Party and their explosion of the state budget over the last 3 years let alone 10 is criminal.