New tax and fee hikes exclude middle class and poor from recovery
Published March 7, 2016
Editorial by Greenville Daily Reflector, March 6, 2016.
The changes in the North Carolina sales and use tax enacted by the N.C. Legislature in 2015 and implemented Tuesday are a more bitter pill for some people than others. That is usually the case with regressive taxes..
Such taxes place a proportionally greater burden on lower-income citizens than higher, violating the equity principal underlying the tax system — that taxes should be distributed based on people’s ability to pay. Instead, regressive taxes place the heaviest burden on low-income individuals and families.
Services including labor for car and tire repairs (including the cost of diagnosing problems), roadside service fees and any adjustments made to keep a car running safely and smoothly all will be taxed.
Clothing repair and basic computer maintenance now will be taxed. Any services that keep any personal property calibrated, tuned and in working order now will be taxed. There are dozens of new fees and taxable services on the list, which can be studied at the N.C. Department of Revenue website at www.dornc.com/downloads/e505_10-15.pdf.
It amounts to a double-whammy for poor and modest wage earners because the new income tax structure that this legislation was enacted to offset gives the least benefit to them and the most benefit to the wealthy and large corporations.
The only appreciable savings from the income tax cuts went to those individuals and corporations earning the most. Likewise, the sales taxes and fees will be the least burden for those with the greatest disposable income.
To say it another way, low and modest earners will be forced to make fewer purchases and seek fewer services and do without other things in order to pay for those services they must have. Added up, the cost of living, already challenging for many to manage, becomes unmanageable. By necessity, they will stay home more and consume less.
That was fine with our legislators and Gov. Pat McCrory, who signed the budget that contained this new tax plan. The state will get its needed revenue from the wealthier portion of the population who benefitted most from the income tax cuts and have more to contribute back to the economy. They will make more purchases, use more services and live in greater comfort because the taxes and fees will take a smaller percentage of their total income than that of people with more modest means.
Small business owners will try to pass their added costs on to their customers, but if so, they had better hope their customers are wealthy. People struggling to make ends meet already have begun their lists of products and services they must do without.
What happened to the popular conservative principle that government should stay out of people’s lives and businesses?
March 7, 2016 at 9:41 am
Richard L Bunce says:
You of course ignore the lower income tax rate for all and the significant increase in the Standard Deduction which provides a much more significant benefit for lower incomes than higher incomes. Taxes are for funding the minimum essential government functions, not social engineering.
March 7, 2016 at 9:43 am
Richard L Bunce says:
I do agree that private entities like business should not do the governments dirty work and collect taxes whether sales tax, payroll tax, or income tax. Tax payers should get a tax bill monthly from government... that would quickly lead to significantly lower tax rates.
