Hey Georgia General Assembly: North Carolina Is Trying To Kill Their Income Tax Too

Taxes suck.  We hate ’em.  Well, some wish they could pay more, I’m sure (email me if you’d like to pay my taxes for me…I’ll send you my P.O. Box where you can send your checks), but we generally just don’t like to send our hard-earned dollars to the government coffers.  Georgia is sandwiched betwixt two states who currently don’t levy income taxes on residents:  Tennessee and Florida.

Now North Carolina Republicans in the legislature are working to ax their state’s income tax:

State Sen. Bob Rucho, a Mecklenburg County Republican and chairman of the Senate Finance Committee, said Wednesday that he hoped to use the 2015 legislative session to eliminate the state income tax, replacing it with a consumption-based sales tax to make up for the lost revenue.

“That’s a direction we’d like to go,” Rucho said in an interview as the state Senate adjourned for the year. Rucho said it was impractical to push for such a steep cut during a short session the legislature holds in even-numbered years, but that cutting the income tax was a top priority of his when the legislature reconvenes for its biennial full session.

North Carolina’s income tax accounts for about 61 percent of state revenue, Rucho said. But the revenue stream has been choppy in recent years, given the impact of the recession. The uneven results on a year-over-year basis can play havoc with annual budget planning in a state that requires a balanced budget, and it’s something Rucho said he wanted to avoid.

Both Senate President Pro-Tem David Shafer (R-Duluth) and Senator Josh McKoon (R-Columbus) sponsored bills to phase out the income tax in Georgia in the most recent General Assembly session.

h/t: Drudge Report

19 comments

  1. gcp says:

    For those that love the income tax can you explain why N.C. is looking to eliminate the income tax? Many times you whine that Texas has a sales tax only because of oil, Nevada only because of gambling and Fla. only because of tourism so how do you explain N.C. and maybe you could also explain S.Dakota, New Hampshire, Washington and Tenn. Could it be that the sales tax is more equitable, efficient and better for the economy? It’s time for Ga. to get on board.

      • Scott65 says:

        I’ll second that motion…its a stupid idea to be looking to NC for inspiration right now. This would be just one more way to push the financial burden to the lower incomes for whom sales tax is a much higher percentage of their income…and if I was the NC GOP, I wouldn’t be so certain that republicans will be in charge after 2014 in NC.

  2. benevolus says:

    They are bothered by a “choppy” revenue stream based on income tax, and they are going to fix it by using a consumption tax? Yeah, that ought to do it!

  3. northside101 says:

    South Dakota–hardly anybody lives there (maybe 700,000 people?)

    New Hampshire—very high property taxes (lot of items there funded at local level) and reliance on sin taxes. They may have been first state in modern history to have a lottery (despite its GOP reputation, New Hampshire really is more libertarian than Republican; it even backed Obama twice—it certainly is not a socially conservative state)

    Washington—I suspect a high sales taxes and I can’t imagine property taxes are cheap in the Seattle area, where the bulk of the population live

    Tennessee—Very high sales tax

    Florida—High property taxes

    And lets add Wyoming—few people live there (less than the population of either Cobb, DeKalb, Fulton or Gwinnett Counties, in fact the smallest state in population), and home of some of the world’s largest deposits of coal in the eastern part of the state (as BNSF and Union Pacific RR can attest to with the countless coal trains running out of there to supply energy-thirsty Texas and Midwest/Eastern states). Drive the hundreds of miles of I-80 in the state, all you see mainly is high desert and the Union Pacific RR trains moving across miles of barren land as quickly as possible!

    Sales tax is already 8 percent in the city of Atlanta—would you want 10 or 11 percent to eliminate the income tax? There also are concerns if sales tax gets too high, Georgians who live say in or near Columbus or Augusta could cross the border in search of cheaper sales tax—I suspect a lot of Chattanooga residents do that when they face somewhere around 10 percent sales tax, easy to cross into Walker and Catoosa Counties.

    Perhaps what may be more feasible in the short run is a reduction in the income tax—as it makes up a large portion of state revenues, no quick fix or easy way to eliminate it. No free lunch.

    • gcp says:

      Well yes, sales tax will go up if we eliminate the income tax. That’s the idea. As for the “no free lunch” Those that currently pay no income tax do get a “free lunch.
      As for the old energy argument in Wyoming or Texas or the low population argument in S. Dakota and Wyoming what about energy rich, low population N. Dakota? They do have an income tax.
      And what are the” special circumstances” in N.C.? The answer is there are none, just like in Ga. and that’s why we need to eliminate the income tax.

      • You should check the exemptions in Georgia – almost everyone pays income tax here, the brackets haven’t been updated since the Depression. I believe the top rate starts at about $2,000 maybe even less. For all effective purposes, we have a flat tax.

        So who is it that doesn’t pay income tax? Illegal aliens. Explain to me why I should raise my taxes (as I will pay more in sales taxes than I save in income taxes) so that someone else also pays more?

        In other words – in order to punish person X, we also have to punish you. But hey – person X will be punished! Hey why are you walking away…

        • gcp says:

          “Almost everyone pays income tax here” Those that engage in criminal activity, do you think they pay income tax? And how about nonprofits? Think they pay corporate tax in Ga.? And the “self-employed” Sure some of them pay what they owe but how many underestimate income or how many don’t even file a return. This issue is not about punishment; it’s about an equitable tax system.

  4. staugdawg says:

    If the Republicans in Georgia ever want to make a bold move now is the time. I fear Georgia’s Republican leadership is too scared to make such a move because they are worried about the political fallout from those who won’t vote for them anyway.
    Plus we might get Boortz to move back to the Peach State. (Hint – there is a reason he and many like him are moving to states with no income taxes…….just a thought)

  5. IndyPendant says:

    Nobody wants to pay “more” taxes. What we should be doing is paying for what we have spent/are spending. Apparently you think it’s okay to leave this tax burden for future generations, so you make “jokes” about having someone else assume your responsibility.

    If you hate this country so much, why are you still here?

  6. northside101 says:

    Continued from yesterday….

    Tennessee is not COMPLETELY free of an income tax. There is a personal income tax (6 percent) imposed on dividends and interest (bonds, stocks, etc.) and the state also imposes a corporate income tax. Tennessee also ranks first among the 50 states in averaged combined state-local sales tax at 9.44 percent. Someone from the Georgia side of the border told me years ago that if you made under $70,000 a year, it made more sense on the tax side to live on the Georgia side; if 70k or more, the Tennessee side. (Tennessee’s state sales tax is 7 percent, but local taxes can add up to 2.75 percent to that amount; Georgia’s statewide sales tax rate has been 4 percent for about 25 years, since about 1989 or 1990 when it was raised under then-Governor Joe Frank Harris).

    You also have to look at what functions are done in these states at the state level vs. local. For example, in New Hampshire, education and welfare functions traditionally have been handled more at the local level (this in a state with no sales or income tax), thus the state’s reputation as a high property tax state. Easy to have a low tax reputation for state taxes if you pass a lot of the burden onto the locals in the form of high property taxes.

    None of this means an income tax reduction (if not elimination) in Georgia is not desirable, but it must be weighed with several factors, such as impact on the state budget and our triple A bond rating, impact on retail sales, etc.

    • I bet you in New Hampshire’s case, the locals did not have the burden of education passed on to them. My guess is that the locals (through high property taxes) always valued education and spent a lot on it and the state never had to assume that role.

      Now, go to Georgia 60 years ago. The locals weren’t interested in educating about 30% of the population AT ALL. Many of the rest of the local population don’t value education (still don’t). People who did went to private school or a well funded whites only public school. Here the state was thrust into the role of education because the locals couldn’t be bothered to do it.

      Different story in NH – but as others have commented, very important to know when considering their tax structure.

      • staugdawg says:

        Or just maybe the majority of the local parents are involved in the process and not hanging out eating Doritos and watching TV. Therefore, the local tax dollars are spent wisely and at the same time teachers and administrators are held accountable.
        Everyday small private schools educate students for a lot less than the public system with better results.

  7. northside101 says:

    gcp was asking yesterday about North Dakota, why it has an income tax despite its small size? May have to do with Scandanavian heritage in the state and farmers’ distrust way back when of the large railroads and banks in the East that seemed to dominate the state. Basically, distrust of wealth concentration.

    Chris, one New Hampshire, New England’s “town hall” tradition probably explains why to a large extent education is more a local function in New Hampshire. And you are right about the high property taxes there (while there is some dispute as to high the state ranks in the category, third highest, fourth highest, etc., I don’t know of anyone claiming the state’s property tax collections are among the lowest in the nation). According to the Tax Foundation, New Hampshire’ property tax collections per capita are twice as high as Georgia’s ($2,463 versus 1,096 here in Georgia, 1,507 in Florida and 1.562 in Texas). Also worth noting is New Hampshire does tax interest and dividends, so it is not completely an “income tax free” state.

    Certainly some states without (or mostly without) a personal income tax have grown faster than Georgia—but not all. Between 1980-2010, Georgia added 4.2 million people (net increase), compared to a much lower 1.8 million in adjoining Tennessee, about 400,000 in New Hampshire and less than 100,000 in Wyoming. A number of factors can influence movement among the states—weather for example (Wyoming winters, such as in the Yellowstone area where freezing temps can occur even in the summer, at least at night, may make you think twice about whether that is worth not paying a state income tax—ditto for South Dakota and New Hampshire). Ease to transportation access—undoubtedly having Hartsfield-Jackson is a big asset in luring jobs to metro Atlanta. Education as well.

    As for North Carolina, yes it does have a high-tax reputation compared with other southern states and a dismal jobs situation in recent years—understandable why Republicans looking to cut taxes in that state. But how far they can go remains to be seen; the state after all is hardly a Republican monolith—Obama won it (just barely) in 2008 and lost by basically (if you take out third-party voting) a close 51-49 margin to Romney—of the 24 states Romney won last year, North Carolina was his lowest percentage state (at just barely 50). The large urban areas of the state—Asheville, Charlotte, Research Triangle area—backed Obama and are trending Democratic (though Romney prevailed thanks to margins in the textile mill counties and rural/suburban counties outside the urban areas).

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