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Mama’s Gonna Buy a New Pair of Shoes: The Truth about the Senate Budget

The Senate version of the state budget sunsets two temporary taxes: the ¼ cent sales tax and 8% upper income tax. For middle class families like mine, this means a tax saving of about $50 a year. What should I do with this tax windfall? Fifty dollars won’t even buy a good pair of shoes.

No, the Senate proposal is definitely a ‘rich man’s budget’, it does little for folks like me. Ending the temporary taxes like the Senate proposes puts the state into a budget deficit of about $300 million, which means we don’t have money to make capital improvements to roads, schools and green spaces.

Moreover, the Senate budget includes less money for public education, community colleges or health and safety programs. For the average North Carolina family, the tax savings are minimal compared to the impact on the state.

The state should keep the temporary taxes in place until the entire tax system is modernized, they should make the capital improvements necessary to keep pace with growth and fund programs that help families. I can wear my old shoes a while longer.

3 Comments


  1. Dallas Woodhouse

    June 13, 2007 at 2:15 pm

    It should be noted that many small business operators pay the 8% marginal rate as individual filers. This 8% rate makes it much harder to create, start and expand a small business. To say that only rich people benefit from the rate reduction is just not true. You have to look at the many small operations that have to file as sub-chapter s corps and pay the highest rate.

  2. gregflynn

    June 14, 2007 at 3:22 am

    The 8% rate kicks in for net individual income over $120,000. Expenses for creating, starting or expanding a small business would be deducted from gross income and would reduce tax liability. S-corporations are elective entities and the tax rates apply to individual shareholders separately on their proportional share of income and not on the combined corporate income. Owners choose S-corp status over C-corp because of tax benefits and easier accounting.

  3. aplum

    June 14, 2007 at 8:45 am

    North Carolina needs to modernize its tax system but in a way that is fair to businesses and individuals. We need to expand the tax base to include services not just goods. Businesses need to pay their share.

    We should keep the temporary taxes (sales & income) in place for another two year while we modernize the system. This would put the state on sound financial ground while it transitions in new sources of revenue instead of burdening it with debt.

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