NC Budget and Tax Center

House tax plan bad for business

This is the fourth of a six-part blog series. (See Part 1, Part 2, and Part 3)

What would the House tax plan mean for North Carolina taxpayers? In this blog series we highlight the experience of sample taxpayers under the House tax plan. In conjunction with a distributional analysis of the tax plan which gives a better picture of the full impact, these fictional but true to life profiles will demonstrate that middle-, fixed- and low-income taxpayers would lose under this plan while the wealthiest will gain.

House tax plan bad for business

Jim lives in rural North Carolina. He started a business as a sole proprietor a few years ago—an auto repair shop that he operates out of a storage unit in order to keep overhead costs low. Jim, single with no children, earns about $37,000 a year from his auto repair business.

Under the House tax plan, Jim would see the amount of state and local taxes he pays increase by about 38 percent, or $441. When Jim realizes that HB 998 would amount to a tax hike for him, he is confused because the proposal has been framed as a massive tax cut. The House tax plan reduces the amount of pass-through business income that Jim would be able to deduct from his taxable income and would eliminate the deduction in its second year, while under the current system he could deduct all of his income. Also, due to potential budget cuts to rural economic development programs, Jim is told by the local rural economic development organization that it might not be possible to move forward on his loan application if the cuts that are needed to balance out tax cuts in the state budget go through. Jim worries that if he can’t acquire a separate property for his business he will have to continue working on cars out of his storage unit, which limits the amount of business he can take on.

Check Also

New budget a roadmap full of potholes and an unclear destination

A new BTC report highlights how the new ...

Top Stories from NCPW

  • News
  • Commentary

449,235 - Total undergrad enrollment in North Carolina 19,767 - Total for-profit undergrad enrollmen [...]

There’s a new rumor afoot about judicial reform that lawmakers may try to pass a judicial appointmen [...]

The head of North Carolina’s controversial charter takeover program says there’s no guarantee he’ll [...]

UNC Board of Governors Chairman Louis Bissette began the new year by penning a column urging his own [...]

Mounting student debt is a nagging problem for most families these days. As the cost of higher educa [...]

Latest racist attacks on immigrants could be an important tipping point As bleak as our national pol [...]

Grand constitutional questions in this country aren’t settled until the Supreme Court has its say, e [...]

The post Gerrymander struck down appeared first on NC Policy Watch. [...]

Featured | Special Projects

NC Budget 2017
The maze of the NC Budget is complex. Follow the stories to follow the money.
Read more


NC Redistricting 2017
New map, new districts, new lawmakers. Here’s what you need to know about gerrymandering in NC.
Read more