Legislative leaders reached a basic agreement on a tax plan late Wednesday that limits a proposed 2 percent income tax surcharge to North Carolinians who earn more than $250,000 a year.
"There's a broad agreement," said Bill Holmes, spokesman for House Speaker Joe Hackney, a Chapel Hill Democrat. "There are still a couple small things they want to talk about. It's an agreement in principle."
The plan otherwise resembles a compromise that fell apart last week but that includes a 1-cent increase in the sales tax, a 10-cent-per-pack increase in the cigarette tax, higher taxes on alcohol and a tax on digital downloads and online purchases. It raises $990 million for the state.
The proposal fell apart last week because the 2 percent surcharge, which is applied to the taxpayer's income tax liability, was imposed on everyone.
Gov. Beverly Perdue and some lawmakers objected to raising the income taxes on middle- and lower-income North Carolinians. Perdue was briefed on the revised plan by legislative leaders Wednesday morning.
"She is basically on board," said Sen. David Hoyle, a Gaston County Democrat and co-chairman of the Senate Finance Committee.
Legislators were feeling the pressure of a frustrated public and school systems unsure how many teachers they can hire for a school year that begins in three weeks. Lawmakers are already a month overdue with their spending plan. (N&O)
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Re: Tax plan would hit higher wages
The story needs to be clearer about what is meant by "tax liability". Is that the same as the "North Carolina Income Tax" line on the tax form? If so, then people's tax bill for the year would be increased by the surcharge percentage regardless of whether they had too much or too little withheld from their paychecks during the tax year. Some reports, however, make it sound as though the surcharge applies only to the amount of tax still owed at tax filing time. In that case, if a person had the right amount withheld throughout the year, the surcharge might be very small or none at all.