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  • From: "Common Sense Foundation" <david@common-sense.org>
  • To: <common-sense@lists.ibiblio.org>
  • Subject: Consider This: Tax Sunsets
  • Date: Thu, 23 Sep 2004 16:33:49 -0400

Title: Tax Sunsets

The COMMON SENSE Foundation

Consider This…

TAX SUNSETS

With the campaign rhetoric heating up, Gov. Mike Easley has been talking taxes lately. This week he told a group of reporters that he would support the sunset (or expiration) of two critical, temporary tax increases enacted in 2001 and renewed last year.

Its unfortunate that the two taxes in question are lumped together so often, because theyre quite different. One is a half-cent increase in the state sales tax, and the other is a top marginal tax bracket in the state income tax.

Those who reflexively oppose any tax are eager to lump these together and call for Easleys head for pushing the two hikes. Back in 2001, News and Observer political commentator Rob Christensen called the tax increases a politically gutsy move that could very well cost Easley his re-election in 2004.

It was indeed a gutsy move, yet the gamble may have paid off, since today its not at all clear that it will hurt Easleys political prospects.

But what is clear is that the two taxes are different. The sales tax increase, because it falls disproportionately on the poor, is pointlessly regressive and hurts the very consumers who are most likely to spend what little money they earn.

The income tax increase, on the other hand, was a great idea that ought to stick around. Its a tax increase only on the very top earners in the state; for married couples filing jointly, for example, the tax increase takes just 0.5% of any additional income they earn above $200,000. Thats hardly imposing any hardship, and it produces at least $100 million annually in a state that lacks the funds to educate its children, or heal its sick, or repair its infrastructure.

In 2001, Republicans in the General Assembly moaned that the income tax increase in particular would destroy North Carolinas competitiveness. Somehow, though, our state still ranks #1 in corporate relocation studies every year.

Nobody knows what next year will bring. But it shouldnt bring a bonanza for the already wealthy at the expense of those who cannot make ends meet.

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  • Consider This: Tax Sunsets, Common Sense Foundation, 09/23/2004

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