Aftermath

Opinionators of all stripes are out in force today, decrying the wanton destruction in North Carolina by Republican policymakers. It's a who's who of Monday-morning quarterbacks, remarkable in the fact that not a single editorial page has words of praise for our out-of-control government. A column by Ned Barnett reflects the general consensus:

As the session neared its end last week with a House vote on the budget, Speaker Thom Tillis left his post and took a place among the representatives. Normally, the speaker doesn’t debate, but this time Tillis wanted to speak not as a leader who directed a wave of legislation that took a toll on the poor and unemployed, but as a human being. Tillis, a Mecklenburg County Republican, asked, “Does anybody really think that I came down to this legislature so that we couldn’t take care of people who were helpless and need the state’s help?” In his question rang the answer to what went wrong for Republicans during their first turn in more than a century to control the governorship and the legislature. They had hoped to be reformers, to be helpers, to be a force for a new way. They said they would end the backroom dealing and clean up what they saw as the waste that marked the Democrats’ long run in power. They would be the people’s champions. Instead they became villains.

Different editorial pages point to other aspects of GOP over-reaching.

The mainstream media share the blame for the disaster unfolding in our state. In 2014, more than a few editors argued for giving Republicans a chance. They supported Pat McCrory. They downplayed the consequences of Art Pope's corporate coup. Like watchdogs asleep in the backyard, they deluded themselves into a game of false equivalency, hoping against hope that Republicans would somehow rise above their pettiness, greed, and racial biases. They were wrong.

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Read the commenter Al Adersen's comments on the Salisbury Post editorial.

The "unleashing of North Carolina's economic potential" assumes supply side economics is a functional model, and is not merely feeding a horse more oats so that some may pass through to the sparrows. We are making a budgetary gamble with a non-revenue neutral budget hoping for a business boom via a corporate tax cut. If reality does not meet expectations -- if prosperity is not unleashed in the next couple of years -- I look for even more fee and tax increases, because that is the way budget shortfalls are paid for.

The large print giveth, but the small print taketh away. Eighty percent of North Carolinians will see a tax increase, and that is not counting rising fees and other ways of being nickled and dimed.

The electric bills are going up, with taxes more than doubling: The act increases the current 3.22% tax on electricity to 7.0%, effective July 1, 2014. “Tax reform” is the 4th rate hike in 4 years for most Duke customers – while the largest customers remain tax-free. Residential and local governments will bear the greatest burden of the increase, as most commercial and industrial customers are able to deduct sales taxes from state and federal income taxes.http://www.ncwarn.org/2013/07/new-tax-hike-on-electricity-should-lower-duke-energys-proposed-increas... (This tax increase also applies to piped natural gas.)

The back-to-school sales tax holiday weekend, around for more than a decade, is ending:
This coming weekend, Aug. 2-4, is the final year in North Carolina for the tax holiday, which provides shoppers with discounts on everything from computers to backpacks to clothing. (Also going away next year is the annual tax holiday for Energy Star-rated appliances.)
Read more here: http://www.charlotteobserver.com/2013/07/27/4191247/stock-up-last-nc-back-to-school.html#storylink=cpy.

Taxes go up on bread, newspapers, vitamins and supplements: Nutritional supplements, bakery bread, and newspaper sales exemptions are repealed. http://www.lexology.com/library/detail.aspx?g=e97c50f7-85ac-4985-a125-9d31e07817f3

Movies, entertainments, live music and educational outings now subject to new tax: General rate of sales tax applies to admission charges to movies, museums, and live entertainment, effective January 1, 2014.
http://www.taxrates.com/blog/2013/07/23/north-carolina-to-have-tax-reform/

Taxes go up on previously exempt services: General rate of sales tax applies to sales of service contracts, which include warranty and maintenance agreements, repair contracts, or similar agreements, effective January 1, 2014.
http://www.taxrates.com/blog/2013/07/23/north-carolina-to-have-tax-reform/
(Studies are also recommended to tax more services).

Tuition gets more expensive and schools more crowded: The tax plan signed into law today exacts over a $600 million price tag to our state at the same time that the budget proposes to cut teachers and teaching assistants, increase class sizes, increase tuition at community colleges, and reduce NC Pre-K slots.
http://www.ncjustice.org/?q=special-campaigns%2Fstatement-together-nc-compromise-budget

The retired will see new income tax: Deductions previously allowed from retirement income – $4,000 for government pensions (except for public pensions protected under the Bailey court decision) and $2,000 for private plans – are eliminated. - See more at: http://states.aarp.org/aarp-protects-retirement-income-in-nc-tax-plan/#sthash.13vsM3c3.dpuf.

Gasoline tax has been capped at 37.5 cents per gallon, but, perspective is in order: North Carolina increased its motor fuels tax to its second-highest level in history on Monday.
The increase was small, just one-tenth of a cent per gallon, but the 37.6-cents-per-gallon level is second only to the 38.9 cents per gallon that North Carolinians were paying in the first half of 2012.
http://www.bizjournals.com/triangle/blog/2013/07/nc-gas-tax-rises-to-376-cents-a.html

The mortgage and property tax deduction has been lowered to $20,000, and there are new taxes on the sale of modular and manufactured housing: Manufactured homes (now 2% or $300 maximum) and modular homes (2.5%) will be subject to tax at a full 4.75% state sales tax rate. http://www.nelsonmullins.com/newsletters/hall-nc-tax-bill
The new law puts a $20,000 cap on real estate, mortgage interest, and property taxes. In the past, there had been no limit. http://www.blackmountainnews.com/article/20130723/NEWS/307230014/

And, par for the course, the poor get poorer: The poor, those who make less than $12,000 a year, will lose the earned income tax credit. That plan means several hundred dollars annually for 900,000 North Carolinians. http://www.blackmountainnews.com/article/20130723/NEWS/307230014/

Which includes military families: For nearly 64,000 low-income military families in 2011, the EITC ensures that enlisted men and women can meet the basic needs of their families. If the EITC is allowed to expire, these families will see their taxes increase by as much as $272 a year—enough to pay rent or buy groceries for a month. For many military families, the combined federal and state EITC is reducing the severity of working poverty and keeping many more out of poverty. http://www.ncjustice.org/sites/default/files/Military%20EITC%20Fact%20Sheet.pdf

But yachts, jets and country club goers are special: The bill maintains a $1,500 cap on the sales tax for a yacht or a jet, as well as exempts country clubs from corporate income tax. http://www.wncn.com/story/22911472/mccrory-signs-tax-reform-into-law
Meanwhile, the estate tax repeal applies to properties valued at more than $5.25 million and kicks in when property is passed down, which the state rightly considers new income to the lucky heir. The tax affects very few people: In 2011, only 23 filers paid it. http://fayobserver.com/articles/2013/07/22/1270484

Pro tip: When you hear or read "regressive taxation", odds are, it is hitting your pocketbook.
Eighty percent will see a tax increase. Breakdown here: http://www.ncjustice.org/sites/default/files/Joint%20Tax%20Plan%20Results_with%20EITC%20in%20baselin....
The entire tax bill is here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H998v8.pdf.

The great unleashing of NC does not seem to apply to small businesses, and R&D.

Small businesses will see more tax: “For example, under this tax plan, 60 percent of the small business filers — or 390,000 returns — will see a tax increase under this plan amounting to $1,150 on average,” explained McLaurin. “When you put it all together, that comes to $450 million dollars across the state in additional taxes on small businesses. Only those filers who have over $253,000 in business income will see a tax decrease. I know of many small businesses right here in our community whose income is nowhere near that.”
http://www.yourdailyjournal.com/view/full_story/23218902/article-McLaurin--tax-reform-more-of-a-shif...

Tax credits for research and development eliminated: Investor groups say the upcoming expiration of a state tax credit designed to spur investments in early-stage businesses will make it harder for young technology companies to raise the capital they need to survive and thrive.
“It is clearly going to hurt us at the very time we need to encourage early-stage investments,” said Elaine Bolle, president of RTP Capital, a group of nearly 40 local angel investors. The group of wealthy individuals has collectively invested in about 10 startups over the past two years.
“Early-stage companies create jobs,” Bolle said. “They are the biggest source of jobs.”
The Qualified Business Tax Credit, which is set to expire Jan. 1, is a casualty of the new tax structure approved by the Republican-dominated legislature and signed by Gov. Pat McCrory. The trade-off for wholesale cuts in both corporate and personal income taxes was the elimination of 48 of the more than 300 tax breaks on the books.
“It is very hard for me to understand why this credit was cancelled,” Bolle said. “It goes against our reputation as an entrepreneurial center, a research center.”
Read more here: http://www.newsobserver.com/2013/07/26/3060115/nc-tax-overhaul-means-credit-for.html#storylink=cpy

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The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR