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Here’s what real tax increases in North Carolina look like

By Brian Balfour
Posted Friday, June 6, 2014

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Raleigh, NC - Progressive protestors, including “Moral Monday” demonstrators, have for roughly the past year voiced their opposition to a supposed state “tax increase” passed last year. Specifically, they gripe that the landmark 2013 North Carolina tax reform – which lowered income tax rates on all income levels – actually results in a tax increase on 80 percent of North Carolinians. Lower-and middle- income households will be especially hard hit, they claim.

The “80 percent will pay higher taxes”, however, has been soundly debunked. Washington Post fact-checkers have called the claim “absurd,” factcheck.org bluntly said the claim “is wrong,” while WRAL-TV in Raleigh declared the statement is “unsupported by facts,” and “is simply not right.”

Indeed, even the head of the organization that produced the report used as the basis for the 80 percent claim has publicly acknowledged, “It’s just a very inaccurate use of the 80 percent number.”

So progressives are quick to voice outrage over make-believe tax increases, but how do they feel about actual tax hikes?

Between 1991 and 2009, the state sales tax nearly doubled from 3 percent to a high of 5.75 percent. Adding on local sales taxes, most North Carolina families were paying a 7.75 percent sales tax on purchases.

Progressives label the sales tax as “regressive” and harmful to low-income households disproportionately. So why no protests in 1991, 2001, 2003, 2005, 2007 or 2009, all years in which the sales tax was increased? And recall it was Democratic Gov. Bev Perdue who wanted to extend the 2009 temporary sales tax increase in 2011, a “regressive” tax that would have cost North Carolinians $820 million a year. Yet chanting protesters were notably absent from the legislature’s hallways that year.

The fact of the matter is that progressives have no problem with tax increases – even so-called regressive tax hikes – as evinced by their silence on a long list of tax-raising legislation over the last few decades.

Following is a partial list of significant tax increases enacted from 1985 to 2010:

  • Authorize local governments to add another 0.5% to sales tax – 1986
  • Increase state gas tax by 2 cents per gallon plus a new 3% sales tax on wholesale price of gas – 1986
  • Increase corporate tax rate from 6% to 7% – 1987
  • Raise excise tax on liquor from 22.5% to 28% – 1987
  • Increase state sales tax rate from 3% to 4% – 1991
  • Raise tax on insurance premiums from 1.75% to 1.9% – 1991
  • Increase corporate tax rate from 7% to 7.75% and levy an additional surtax from ’91 to ’94 – 1991
  • Add a 7.75% personal income tax rate for income above $100,000 – 1991
  • Motor fuels tax increased by ½ cent – 1991
  • Increase cigarette tax from 2 cents per pack to 5 cents, levies a 2% tax on wholesale price of other tobacco products – 1991
  • Impose a 1% gross receipts tax on movie admissions – 1998
  • Increase state sales tax rate from 4% to 4.5% (supposed to expire in 2003) – 2001
  • Create a 8.25% personal income tax bracket for highest income households (supposed to expire in 2003) – 2001
  • Impose 5% sales tax on satellite television service – 2001
  • Renew the “temporary” 4.5% state sales tax rate – 2003
  • Renew the “temporary” 8.25% income tax rate – 2003
  • Increase tax on telecommunications from 6% to 7% – 2005
  • Increase sales tax on liquor from 6% to 7% – 2005
  • Increase cigarette tax from 5 cents per pack to 35 cents – 2005
  • Extend the 8.25% income tax rate for another 2 years – 2005
  • Increase tax on home satellite services from 5% to 7% – 2005
  • Renew (again) the “temporary” 4.5% state sales tax rate – 2005
  • Make permanent ¼ penny of the 2001 “temporary” state sales tax increase – 2007
  • Increase state sales tax rate from 4.75% to 5.75% (also in 2009 as part of the ‘Medicaid swap’, 0.5% of the local sales tax was shifted to the state) – 2009
  • Changes the state gas tax cap to a floor, ensuring higher gas tax – 2009
  • New sales tax on online click-though sales and digital products – 2009
  • Increased taxes on beer, wine and liquor – 2009
  • Increased tax on cigarettes and tobacco products – 2009
  • Create a “temporary” 3% surcharge on tax bill for corporate income taxes – 2009
  • Creates a “temporary” surcharge beginning at 2% for personal incomes over $60K – 2009
 
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