With the arrival of a new year, Gov. Pat McCrory has signed several new laws, including a tax reform package, according to CBS.
His message to citizens is a positive one: Taxpayers will be able to keep more of their money in 2014.
Despite the fact that the income tax rate has been reduced to 5.8 percent in the upcoming year, McCrory’s tax reform package is not necessarily ideal. It appears as if North Carolina legislation is making up for the income tax cut by complicating taxes elsewhere.
Before the tax reform, North Carolina used a three-tiered system under which the highest earners paid the highest tax rate of 7.75 percent. Now the tax rate has been reduced to 5.8 percent for everyone in the state, regardless of salary. Those who were previously paying 7.75 percent have seen their taxes reduced by a quarter. Meanwhile, those paying 6 percent on income tax have seen a mere 0.2 percent change in what they will be paying the state, according to CBS.
In addition, McCrory and lawmakers allowed the state’s earned income tax credit to expire, which had previously boosted the salary of working class taxpayers and allowed families a pre-tax income deduction.
While to some this may seem a small price to pay for tax cuts, the reform package appears to be making up for the state’s loss by increasing sales and gas taxes. If McCrory thinks this model will fool taxpayers into thinking they are giving up less money, he is certainly wrong.
A 6.75 percent sales tax has been added to tickets for sporting events and other attractions, according to WBTV. Tax on gasoline has been capped at 3.75 percent through June of 2015. Owners of electric cars will now notice a $100 registration fee that is meant to offset lost gas taxes. Fees have been increased for hunting and fishing licenses and rebates for energy efficient appliances have been cut. In addition, the tax-free weekend for back-to-school shopping has been removed from the calendar.
Perhaps the state income tax percentage has been reduced, but with the increase of taxes in so many other areas it seems as if cuts will hardly be felt, particularly for low-income individuals and families. It is possible that the tax reform is a sly way to convince citizens that they are being forced to give up less of their hard-earned money.
Tax cuts can be a wonderful thing, but only if they are actually allowing North Carolinians to be more financially secure. It is hard to believe that the reduction of income tax will make up for the tax increases everywhere else.
Opinion: Erica Badenchini, Opinion Writer