GOP's sales taxes hit modest incomes

Editorial by Wilmington Star-News, October 10, 2015.

This year's General Assembly, like most sessions, was a mixed bag -- some good stuff, some bad.

One disturbing trend, however, is emerging: A conviction among many of our legislators that the way to pay for state government is by nickel- and dime-ing those least able to pay.

The Honorables cut the state's personal income tax rate. For those making $30,000 or less, that will mean $50 less on their tax bills.

To counterbalance that, the Honorables turned around and expanded the sales tax to cover all sorts of previously untaxed services.

They did the same thing last year, adding a sales tax to movie and theater tickets, manufactured housing (read: double-wide mobile homes) and college students' cafeteria meal tickets.

This time, they had the bright idea of taxing car and appliance repairs and veterinary services. Did your pickup break down? This'll add 6.75 percent to your bill. Is your washing machine on the fritz? Fluffy needs a rabies shot? Ka-ching, ka-ching.

A quick check of federal statistics found that most workers earning $30,000 to $40,000 pay about $630 a year for repair and maintenance services. New sales taxes, then, will just about wipe out their income tax cut. If they have a bad year -- say, the family car turns out to be a lemon, or the refrigerator breaks -- they could easily wind up paying more.

As we've pointed out before, most economists consider the sales tax to be regressive. That means it hits harder on poorer citizens, who tend to squander their money on food, rent and children's shoes, than it does on the wealthier ones, who save, invest and sometimes contribute to legislators' campaigns.

These new taxes, however, seem particularly obnoxious.

Admittedly, not all of them affect the poor -- for example, the sales tax now applies to pet-grooming charges. But some of them seem inspired by the old quote, attributed to the late hotel queen Leona Helmsley, that taxes are for little people.

As one commentator pointed out, better-off drivers tend to trade in their cars every two or three years. The less well off hold on to their transportation and pay to keep it fixed and patched.

The Republicans who passed these increases often talk about their devotion to the small businessman (or woman). Yet all these extra sales taxes will mean extra paperwork and expense for small garages, self-employed mechanics, small veterinary clinics and other non-corporate entrepreneurs.

To add insult to injury, the legislature added a mean little twist. All those sales tax extensions will take effect on March 1. The income tax cuts, however, won't go into effect until 2017 -- which means that most taxpayers won't see any benefit until they file their returns in 2018. For a year or so, then, everybody pays extra. Ka-ching, ka-ching.

Some people think this is great. State Rep. Bob Rucho, R-Mecklenburg, who wrote much of the tax plan, told reporters, "We’re trying to get rid of income tax and move to a consumption-based tax.”

In other words, more sales taxes.

When our local legislators come around next year and ask us to vote for them again, they should be asked, sharply, what they think of all this and what they're going to do about it.

Otherwise, they should be made to pay.

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